East Asian markets have been the foreground for competition between Brazil and U.S. corn exports. Japan, South Korea, and Taiwan are significant importers (accounting for roughly 20 percent of global corn trade) that source primarily from both countries, as exporters’ prices play a pivotal role in expanding market share.
U.S. shipments to all three markets surged in 2016/17 as a result of competitive prices relative to Brazil, where an early end to the rainy season in the Center-West reduced exportable supplies, resulting in a price premium to U.S corn.
However, Brazil’s exports have recovered with a record crop in 2017 (nearly 70 million metric tons of second-crop production) that supports a record export forecast for 2017/18. Shipments to Japan, South Korea, and Taiwan garner about one-quarter of Brazil’s global exports, so expectations of retaining significant market share in 2017/18 underpin the projection.
In contrast, U.S. 2017/18 corn exports are forecast down without the price advantage over Brazil from the previous year.
Trade policies for corn in all three markets are favorable for the United States and Brazil, with both countries subject to zero duties. With neither country having a clear advantage, FOB prices and freights costs are expected to play a prominent role.
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Demand growth in these Asian markets is expected to be steady, nevertheless, these major importers are expected to take advantage of historically low corn prices to displace feed wheat in 2017/18, and supports forecast record global corn trade.