CHICAGO: The United States, which once supplied three-quarters of all corn traded globally, has seen its market share erode with the emergence of rival suppliers in South America and eastern Europe and a record-large US crop this season will do little to revive its corn export dominance.
Several years of historically high prices have bolstered corn production in breadbaskets such as Brazil, Argentina and Ukraine, all of which are forecast to export record or near-record volumes this season.
Meanwhile, last year's historic drought in the United States, the world's top corn producer, prompted traditional US corn importers to look to other suppliers and those trade relationships have blossomed.
"We destroyed demand last year due to the high prices and the drought and traditional importers had to look elsewhere," said Art Liming, futures specialist with Citigroup.
"We'll get some of that demand back but won't get it all back because we've taught the rest of the world to plant corn and we've taught other importers to buy from other origins."
The US Department of Agriculture on Friday increased its forecast for US corn exports in the 2013/14 season (Sept/Aug) by 14 percent to more than 35.5 million tonnes, nearly double the prior season's 37-year low export volume.
But that forecast was still the second smallest in two decades and just a 32 percent share of world trade, according to USDA data released on Friday.
Until 2011, the United States rarely held less than a 50 percent share of world corn trade while Argentina and Brazil combined never held more than 30 percent of the market and Ukraine never held more than 7 percent.
USDA on Friday kept its Argentine corn export view at 18 million tonnes, the second highest ever, and held Ukrainian exports at a record 18 million tonnes. It increased its Brazilian export forecast to 20 million tonnes, up 2 million from the previous estimate and the country's third largest corn exports ever.
Traditional US corn customers such as South Korea and Japan have bought large amounts of the grain from other suppliers in recent years. China, which was a net corn exporter until 2009 and is projected to become the world's top importer within a decade, has expanded its list of large-volume suppliers from just the United States to Argentina and Brazil.
"It's very prudent on China's part. They realize they will be continuing to import corn if their domestic production doesn't increase substantially and they don't want to rely only on the US for origination," said Shawn McCambridge, analyst with Jefferies Bache. "If the US has another drought, they don't want to have to work out any phytosanitary issues at the last minute."
Comments
Comments are closed.