Global Markets: Coarse Grains – Turkey’s Corn, Barley Balance Sheet Revised

    Turkey’s balance sheets for corn and barley are revised in the Production, Supply and Distribution (PSD) database to incorporate the revisions by the Turkey Statistical Institute (TSI). In October, the Foreign Agricultural Service in Ankara confirmed that the TSI revised its trade statistics to include goods entering and leaving Customs warehouses and free trade zones in Turkey.

    The revisions, covering from 2013 through the present, boost corn and barley imports to be more in line with exporters’ data. Exports for both grains are also raised by a similar magnitude, apparently reflecting transshipments to third countries, primarily Iraq and Syria.

    Likewise, corn and barley balance sheets for Iraq and Syria are updated in the PSD database for the same period. Turkey has become as a major transshipment point for feed grain trade in the region, and the revisions provide practical confirmation in the absence of readily available statistics by Iraq and Syria.

    The magnitude of revisions is larger for corn than barley in both countries. With abundant local production, barley remains the key feed grain used in both Iraq and Syria.

    Record-breaking Year for Ukraine Corn Slips Out of Reach

    Despite an initially promising outlook for the 2020/21 year, the forecasts for Ukraine corn production and exports have fallen substantially. In May 2020, Ukraine was forecast at 39.0 million metric tons (tons) of corn production and 33.0 million tons of exports; as of this month, production and exports are down to 28.5 million tons and 22.5 million tons, respectively.

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    Drought conditions across the country have devastated the corn crop and resulted in downward revisions. As an export-focused market, the cut to Ukraine’s corn production has corresponded to lower expected exports.

    Ukraine’s competitors are in position to secure more volume in two major markets – the European Union and China. As discussed in last month’s Grain: World Markets and Trade report, Ukraine and the European Union are each other’s largest trading partners for corn; Ukraine is also the primary supplier of corn to China.

    However, Brazil is the second-largest exporter of corn to the European Union, and inspections of U.S. corn to China (since September 1) have exceeded 2.1 million tons. Moreover, as discussed in this month’s cover story, China is expected to import substantively beyond its tariff-rate quota of 7.2 million tons in CY 2020.

    The deep cuts to Ukraine’s production and exportable supplies are expected to impact both the volume of trade with the European Union as well as market share in China. With Brazil forecast to have record production in 2020/21 and the United States forecast to have both its second-highest production on record and ample supplies, global trade is seeing a rebalancing as the United States steps up its exports, filling the gap in global markets when other corn exporters fall short.

    On top of the available supplies, U.S. corn is currently price-competitive against other bids as well.

    Aside from China, the other countries in East Asia (Japan, South Korea, and Taiwan) have historically imported substantial volumes of corn from the United States, but over the past few years, Brazil has captured some of this trade for itself.

    One possible rebalancing scenario would be a temporary reversal of this trend where Brazil exports smaller volumes to these markets in favor of the European Union, leaving more room for U.S. corn to fill East Asian demand. So far in 2020/21, U.S. Export Sales Reporting total commitments to each of these three countries are up from the same time last year.

    Full report.

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