A good overall article on exports to keep current with our countries grain exports and also ethanol demand. Worth a quick read since it sums up the overall export situition.
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U.S. crop export market share challenged
Experts say tight supplies will keep grain prices high
Competition from the rest of the world is eating into the U.S. share of world grain markets, causing the U.S Department of Agriculture on Friday to lower projections for U.S. corn exports this year and drop forecasts for corn prices.
But the lost international market share might not necessarily end the high prices and strong farm profits Iowa has enjoyed in recent years, the USDA and commodity traders said. Although the U.S. export market might be shrinking, corn and soybean supplies will remain tight, keeping prices high.
The USDA projected that corn exports will fall 50 million bushels “based on the sluggish pace of sales and shipments to date and prospects for more competition from Brazil.”
Brazil has quadrupled its corn exports in the past decade, and other countries are catching up.
Corn exports from Argentina have doubled since 2003. The former Soviet Union, famously unable to feed itself during the Cold War, has increased its corn exports from practically zero to more than 15 million metric tons this year (1 ton equals 36 bushels).
This means more grain will be in world markets in 2013. The USDA report said global coarse grain supplies for 2012-13 are projected 2.1 million tons higher.
“This report shows that the U.S. is losing market share for exports, as more countries are producing more,” said commodity trader Don Roose of US Commodities in West Des Moines.
Iowa is the nation’s largest producer of both corn and soybeans, which together contributed $20 billion in cash to Iowa’s economy last year.
For U.S. supplies, the USDA’s monthly supply and demand report said “projected corn ending stocks are raised 30 million bushels. The projected range for the season-average farm price for corn is lowered 20 cents at the midpoint and narrowed to $6.75 to $7.65 per bushel.”
Corn closed Friday on the Chicago Board of Trade down 2 cents per bushel to $7.09.
“The U.S. export window is shrinking, but old crop supplies are tight,” Des Moines commodity trader Garrett Toay said.
The U.S. will continue to be the world’s largest corn exporter this year, but Roose noted that Argentina and Brazil combined will export more corn this year than the U.S. Brazil also is expected to overtake the U.S. as the world’s leading soybean exporter.
For the marketing year that began Sept. 1, U.S. corn exports are running about 55 percent below a year earlier as more grain comes from other sources. The USDA noted increased production from Brazil, Mexico, India and Ukraine more than offsets a reduction for Argentina.
Although corn ethanol production in the U.S. is running 16.5 percent below a year ago, the USDA left unchanged its projection for use of 4.5 billion bushels of corn for ethanol production this year.
Ethanol chews up almost 40 percent of the U.S. national corn crop and 60 percent of Iowa’s crop.
The world soybean market is less crowded with three nations — the U.S., Brazil and Argentina — making up more than 80 percent of the market.
Brazil will overtake the U.S. as the world’s largest soybean exporter this year, and projections by the USDA for a strong Brazilian soybean crop drove down soybean prices Friday by 34 cents per bushel to $14.52.
The USDA raised its estimate for the U.S. season-average soybean price range for 2013 to $13.55 to $15.05 per bushel, up 5 cents on both ends of the range.
With the Brazilian and Argentinian crops unharvested, the U.S. has seen a 35 percent increase in soybean exports in the current marketing year that began Sept. 1.
A big factor in that gain has been a 20 percent increase in purchases from China, which signed new purchase contracts with much flourish during the visit of Vice President Xi Jinping to Iowa a year ago. Xi is expected to take office as president this spring.
Analyst Paul Burgener of Farm Futures Magazine noted the long-standing weakness in Brazil’s export game: “Early harvested beans in Brazil have not been moving to the ports at a pace quick enough to load the ships waiting offshore.”
Iowa’s 23 million cultivated acres were divided almost evenly between corn and soybeans a decade ago. Since then, demand for ethanol has pushed corn acres almost 4 million ahead of soybeans.
On Friday, Kirk Leeds, chief executive officer of the Iowa Soybean Association, said the time has come for farmers to swing more acres back to soybeans.
“The global demand for soybeans is off the charts and the world wants every bushel of soybeans it can get,” Leeds said. “We need additional soybean acres in Iowa and the United States. Soybeans are a viable option for farmers and the demand is there.”