News from the media: Global traders have clearly seen that the United States, the world's largest corn supplier, has recently encountered difficulties in selling corn, and it is difficult to maintain a strong pace of export in the face of high corn prices. Whether it is Mexico, the main buyer, or other destinations, the situation is a little bit bad. This trend can be partly explained by the bumper harvest of Brazil's second corn crop in mid-2022, which will lead to intensified competition in the international market.
According to the US Department of Agriculture's November supply and demand report, US corn exports will reach 54.6 million tons in the 2022/23 season starting September 1, a year-on-year decrease of 13%, although this is already lower than the average level of the past nine years. The reality is more skinny. The latest export sales report shows that as of November 24, US corn export sales (the sum of loaded and unloaded sales) decreased by 48% year-on-year.
If you only look at the situation of the first few large customers, the situation is even worse. Among the top five customers of U.S. corn in 2021/22, the total sales volume of the U.S. to the second to fifth largest customers is currently down 71% year-on-year. These four customers are China, Japan, Canada and Colombia. This year accounts for more than half (56 percent) of all U.S. corn exports.
In fact, Mexico, which is currently arguing with the United States for the ban on genetically modified materials, has not seen such a large decline in imports. So far in 2022/23, it has purchased 9.1 million tons of corn from the United States, but this is still difficult to compare with last year's strong pace. 11%.
The outlook for Chinese demand for U.S. corn is also uncertain. Since the middle of 2020, China has re-entered the U.S. corn market under the background of the trade war, which once gave the U.S. corn industry a lot of good imagination. But this year's purchases can only disappoint them. As of November 24, China had ordered a total of 3.5 million tons of U.S. corn, a decrease of 71% year-on-year. China accounted for 31 percent of total U.S. corn exports in 2020/21 in the first year of the trade war and 23 percent in the second year. With the trade war dying down, China now accounts for only 19% of total U.S. corn sales in 2022/23, and most of those sales are between March and May. Chinese buyers have all but disappeared from the U.S. market of late. For US exporters, this winter has been a bit cold. Brazil has been sending corn to China since last month, and although the volume is small, it may represent the beginning of a trend.
Brazilian corn export shipments typically slow down by February or March, when U.S. corn shipments start to take off. But this year may be different. Brazil is expected to record a record corn acreage and record production this year. Even Japan, a loyal and large buyer of US corn, has transferred some business to Brazil. Japan, which has accounted for about 20 percent of annual U.S. corn exports in recent years, has not purchased less than 10 million tonnes since 2012/13. However, as of November 24, Japan had only purchased nearly 1.5 million tons of corn, a year-on-year decrease of 52%, the lowest level in the same period in more than 20 years. In contrast, Brazilian corn exports to Japan in the July-October period were twice as high as in the same period last year and the second highest since 2019. Japan is also swapping some corn in its feed formula for more competitively priced rice.
It is also difficult for Canadian imports to replicate last year's grand occasion. The northern neighbor accounts for 10 percent of U.S. corn exports in 2021/22, as a severe drought in the Prairies caused severe crop failures in Canada for wheat and barley, leading to shortages of feed grains and imports of U.S. grains to fill the gap. U.S. corn exports to Canada in 2021/22 are at a record 6 million tonnes, more than three times the recent average and well ahead of the previous high of 3.9 million tonnes set in 2002/03. Corn purchases from the U.S. are also down 87% year-over-year as Canada’s 2022 crop rebounds to normal levels.
Colombia used to be the fifth largest buyer of U.S. corn in 2021/22, but its purchases so far in 2022/23 have been just over 300,000 tonnes, the lowest in 10 years and down 84% year-on-year. While the U.S. remains Colombia's number one corn supplier, its share is declining due to cheaper corn from Brazil and Argentina and lower shipping costs.
Not many countries have increased their purchases of US corn this year. Honduras is one of them, with imports of 433,000 tons, a year-on-year increase of 3%. In addition, the European Union, which has significantly reduced corn production, ordered 105,000 tons of US corn, compared with zero in the same period last year.
Source: AgroPages
