U.S. corn exports on the upswing
Occasionally markets get to the point where they are priced about right. That is true for corn where it is today, says market analyst Richard Brock.
By Richard Brock, Brock Associates
The direction of U.S. corn exports has been disappointing for U.S. farmers. As recently as 2007 the U.S. had a 63% share of the world corn export market and this year it appears that we will likely have approximately 33%. Which is still much better than where we were two years ago. At the same time, Brazil has gone from an 8% market share to 25%, Ukraine from 2% to 12%, and Argentina has taken a bite as well.
For the 2024/25 marketing season, corn export commitments are up 29% vs. last year. As indicated on the chart below, that is considerably above not only a year ago but well above the five-year average and seasonally on pace to exceed the USDA target by well over 100 million bushels.
Corn exports will never get back to where they were in 2007. Two major fundamental changes have taken place in the world. The most important of which, two of the largest seed genetics companies are now foreign owned. One in Germany and one in China. Prior to those years, U.S. farmers had a lock on advanced seed genetics. Now every farmer in the world has access to the same genetic lines. Add to that Brazil still has more potential acres to bring into production and the value of the Brazilian real is now trading at a 23-year low. Hard to compete with those fundamentals in the world market.
Price Does Matter
In 2022 corn prices peaked at $8.00 per bushel. This past fall they bottomed out at $3.60 per bushel. That has encouraged both domestic and foreign consumption. Ethanol production is strong. Foreign countries are buying more corn at $4.50 than they were at $8.00. The laws of economics have not been repealed. Keep anything too high for too long and buyers will find either a substitute or use less.
Attention will now shift to this year’s spring planting. Last year U.S. farmers planted 90.6 million acres of corn. Most everyone in the industry is anticipating that number will jump to 95 million this spring. For this marketing year the bottom for corn prices has already occurred and is well established. There is very little risk of the market challenging last fall’s lows. But don’t anticipate any major drops from current levels until the crop is in the ground. Historically, $4.75 corn is still relatively low-priced, it just feels high because we were looking at $3.60 a couple months ago. It’s like comparing interest rates. Today’s younger generation believes that interest rates are high now. Compared to 18% when most of us were starting in business, today’s rates are low. Occasionally markets get to the point where they are priced about right. That is true for corn where it is today.
