Global Markets: Coarse Grains – India Corn Exports Competitive Regionally

    After over a year of high domestic corn prices, a contraction in poultry feed demand due to COVID- 19 has led to a substantial easing of prices, making India corn exports competitive in the South Asia region once again. Currently, these are forecast at 1.8 million tons for 2020/21, which, if realized, would be the largest export volume since 3.9 million tons in 2013/14.

    From 2014 to mid-2018, the national average domestic corn price was approximately $200 per ton, shooting up to $275 per ton by July 2019 due to production concerns and strong domestic use. Exports to Bangladesh, and to a lesser extent Nepal, have expanded considerably beginning in July 2020.

    This has occurred as prices returned to pre-2018 levels amid the drop in domestic poultry feed demand and record high production in 2020/21.

    Bangladesh typically imports most of its corn from Brazil. However, with global prices elevated due to strong demand and the impact of COVID-19 on global logistics, Bangladesh importers have turned next door to India and sourced more corn from their neighbor than Brazil in recent months.

    The strong volume of exports from India between June and September 2020 boosted Bangladesh corn imports in 2019/20 (Oct-Sep) to a record of just over 2 million tons. Through the first quarter of 2020/21, the pace of corn trade between India and Bangladesh has remained robust.

    However, with chicken meat production in India expected to recover by 5 percent in CY 2021, foreign demand from India’s neighbors will likely see some competition from domestic demand in the coming months.

    Hot Demand for U.S. Sorghum

    At the end of February, U.S. sorghum outstanding sales for delivery by August 2021 stand at 2.8 million tons, the second-largest volume in history. Almost three-quarters of these sales are slated to go to China, while the rest is mostly reported for unknown destinations.

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    Sales to traditional markets, Japan and Mexico, have been insignificant. Reflecting robust sales, sorghum prices at Gulf ports have steadily moved up and currently hover around $350 per ton, the highest over the past decade.

    Most U.S. sorghum is destined for southern China, where animal production is concentrated and demand for feedstuffs runs strong. Imported sorghum has been commonly used as a substitute for corn in feed rations. U.S. sorghum continues to be price competitive relative to domestic corn in the Guangdong area. Typically, corn prices in Guangdong are modestly higher than northern China.

    Strong prices are expected to boost 2021/22 U.S. sorghum planting in the spring, leading to larger production. Exports are projected to reach a record, reflecting larger available supplies and strong foreign demand. There are already 703,000 tons of sales on the books for delivery in 2021/22, an unprecedented volume of sales this early in the year.

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