Global Markets: Oilseeds – Corn Oil Trade Falls with Increased Competition, Tighter U.S. Supplies

    Photo: Iowa State University

    Global corn oil trade, after peaking in 2016, has declined one-third to less than 600,000 tons in 2019. Much of this decline is in response to lower exports by the United States which represented 45 percent of global exports in 2019. Since 2017, U.S. exports have declined 44 percent to 263,000 tons in 2019. Most of this decline has occurred in the European Union (EU) where imports from the United States fell from nearly 175,000 tons in 2017 to close to zero in 2019.

    The lower U.S. export volume reflects a decline in edible corn oil supplies which mostly impacted trade. Derived from wet milling of corn, edible corn oil production and can be impacted by demand for ethanol and other derived products such as corn sweeteners. Export availability can also be impacted by U.S. domestic corn oil demand for food and other uses. The current tight supply situation is reflected in corn oil prices which have nearly doubled over the past 12 months to $1,132/ton.

    U.S Export Trends

    Historically, the Middle East and North Africa have been the major export destination for corn oil. This is reflected in U.S. trade in the 10 years prior to 2012 as this region accounted for about three-quarters of U.S. exports. Total export volume for the period averaged near 360,000 tons with roughly 275,000 tons moving to the Middle East/North Africa region. Most of the remaining exports were confined to the Western Hemisphere with Canada, Mexico, and Venezuela being major destinations. Only about 5 percent of U.S. exports went to markets in Europe and Asia.

    Beginning in 2012, U.S. exports to the EU increased, pushing to near 500,000 tons in 2015. However, U.S. exports to the Middle East and North Africa declined sharply in 2016 coinciding with a rise in the region’s imports from the EU. Given the corresponding rise in U.S. exports to the EU in 2016 and 2017, it appears a larger share of the corn oil imported by the Middle East and North Africa was processed in the EU and, ultimately, U.S. origin.

    With the loss of U.S. exports to the EU beginning in 2018 and the slow decline in exports to the Middle East and North Africa, U.S. corn oil exports declined significantly below historic levels. As noted earlier, tighter supplies in the United States are a factor, especially in recent months, but so is the rising availability of other oils, particularly sunflower oil out of Ukraine and Russia.

    As sunflower oil is priced to sell and favored in both the EU and the Middle East/North Africa region, substitution effects are likely having an impact, particularly over the longer term. In fact, despite growing vegetable oil demand in the region, corn oil exports to the Middle East/North Africa region from all sources have declined 42 percent since peaking in 2011.

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