Grain: World Markets and Trade
Since 2009/10, declining U.S. corn exports have been replaced by just three competitors. Overthe same time period, there has been only a small boost in world corn trade.In past major U.S. production shortfalls(1988/89 and 1995/96), large stockslimited price gains and buffered U.S. exports, thereby reducing incentivesfor other countriesto expand production. In recent years,however,high U.S. prices resulting from strong domestic demand and low stocks have stimulated competitor production. Record supplies in Argentina, Brazil, and Ukraine (combined) coincided with the U.S. drought in 2012, resulting inBrazil becoming the world’slargest corn exporter.The March 28 Grain Stocksreport showed higher-than-expected stocks and caught the industry by surprise. U.S. export prices have subsequently plunged about $40 per ton ($1.00 per bushel). However, the United States is still uncompetitive and it remains to be seen whether these falling prices boost U.S. export sales near-term. Argentina and Brazil are in the midst of harvesting record crops and therefore prices are likely to be pressured further.
Looking to 2013/14, there are expectations for record U.S. plantings and a record crop. This would likely depress prices and ultimately impact planting decisionsforArgentina and Brazil 6 monthsfrom now.
