July 13, 2023
Brazil poised to surpass US as top corn exporter with new China deal
The global corn export landscape is undergoing a significant shift as Brazil, backed by a new supply agreement with China, is expected to surpass the US as the world's leading corn exporter, Malaysia Sun reported.
This development poses a challenge to the US corn industry, which is facing declining export market share and a slowdown in domestic demand for livestock feed and ethanol production.
With Mexico also considering limitations on imports of genetically modified corn, which forms the majority of American harvests, the future of the US corn industry, valued at US$90 billion, is uncertain.
Analysts predict that corn plantings in the US, where corn is the most widely grown crop, will decline, leading to potential adverse effects on farm incomes in the coming years.
Stephen Nicholson, a global grains and oilseeds sector strategist at Rabobank, raised concerns about the long-term demand for US corn, stating that it remains unclear where new demand will emerge from, considering the growth limitations in ethanol production and animal protein consumption.
Brazil, with its ability to harvest two corn crops annually from its tropical soils, is set to flood the global marketplace with corn exports starting from July and continuing into the US autumn harvest. This surge in Brazilian corn shipments, coupled with declining demand for American corn, may result in falling prices that could impact US corn farmers.
Despite the potential challenges, US farmers expanded corn seeding this year to the highest level in a decade, driven by lower seed and fertiliser costs and favourable planting conditions.
China's expanded list of approved Brazilian corn exporting facilities has boosted shipments from Brazil, diverting trade flows from the US and Ukraine. The scalability of Brazil's planting area to meet Chinese demand sets it apart from the US, according to Matthew Roberts, a senior grain analyst at consultancy Terrain.
- Malaysia Sun
