The US is losing its dominance in the world export market for both corn and soybeans, says Richard Brock of Brock Associates
By Richard Brock, Brock Associates
Dramatic increases in commodity prices result in dramatic increases in production. That’s no surprise. The problem is that it’s happening in Brazil and not in the United States. With more land available for production, Brazil is widening the gap in corn and soybean production as compared to the United States.
As can be seen in the chart below, for years the U.S. ruled the roost in both corn and soybean production. That changed in 2017 when Brazil soybean production passed the U.S., and now the trend is accelerating. This year, U.S. farmers produced 4.35 billion bushels of soybeans and Brazil is projected to produce 152 million metric tons or approximately 5.59 billion bushels. While Argentina is currently in the news due to their dry weather, they are a relatively small player compared to Brazil and the U.S.
In the case of corn, Brazil’s production is only about one third of the U.S., but that gap is narrowing as well. Corn production in the U.S. peaked in 2016, and even with improved genetics and technology, corn production has been unable to exceed the 2016 production year. Why? Weather. Every year since 2016 one or more of the major corn producing states has experienced significant weather issues. Drought. Too much rain. Wind. Hail. All of them added up to reduced yields somewhere.
What Does It All Mean?
The U.S. is losing its dominance in the world export market for both corn and soybeans. This year, U.S. corn export sales commitments are down 47% from a year ago, as of December 29. This is a result not only of competition from other countries, but also from decline in usage because of high prices over the last couple of years.
USDA is projecting that U.S. corn exports this year will be 2.07 billion bushels. Brazil’s exports are expected to be 47 million metric tons or 1.85 billion bushels, almost as much as the U.S., even though their corn production is only about a third of ours. Less than 10 years ago, Brazil’s corn exports were under 600 million bushels.
In the case of soybeans, the U.S. is expected to export 2.045 billion bushels this year compared to Brazil’s 89.5 million metric tons or 3.29 billion bushels. Brazil’s soybean exports passed the U.S. in the 2012/13 marketing year, and the gap continues to widen.
The Bottom Line
The world has changed. For the U.S., corn and soybean exports as a percent of total usage are much less than what they were 10 years ago. That trend is not going to change. It’s neither good nor bad, just a fact. U.S. corn and soybean producers are much more dependent upon domestic usage, particularly livestock, than ever before. Chickens, pigs and ethanol plants lead the way on the demand side.
