By MATTHEW D. ERNST
WASHINGTON, D.C. — Lower corn stocks, as well as decreased average corn yield expectations in this month’s USDA Crop Production report, helped strengthen last week’s September and December corn futures prices. But one factor is absent from that upward price pressure, say analysts: U.S. corn exports.
“The big sticking point is exports,” said market analyst Jerrod Kitt of the Linn Group, in comments made before the USDA’s report release on Aug. 12. “We’re looking at an export program that’s still 20 to 25 cents uncompetitive versus the Black Sea and Brazil.”
Black Sea corn exports come primarily from Ukraine corn production, which has increased in recent years. Brazil’s summer and early fall corn exports are also strong, especially as the country’s Mato Grosso region increases its “second-crop” corn production, planted in January directly after soybean harvest.
The current inability of U.S. exports to compete globally is because of lack of available corn from last year’s harvest, said Matt Roberts, extension grain marketing specialist at The Ohio State University.
“When it comes to old-crop bookings, (the U.S.) had a 50-year drought,” said Roberts.
American corn’s ability to compete in the export market will soon change. “We expect the situation to flip once the North American corn harvest comes in,” said Roberts. “The U.S. has better infrastructure (than South American or Black Sea producers) and can deliver grain to the Middle East very efficiently.”
This month’s World Agricultural Supply and Demand Estimates report (WASDE) raised the USDA’s corn production estimate for Ukraine by 3 million tons. That rise came from both more corn area and favorable July temperatures in Ukraine.
According to the USDA’s Foreign Agricultural Service, the increase in Ukraine’s corn area has come as producers plant it in place of lower-value crops, especially buckwheat and sugar beets. Some of the country’s sunflower, soybean and hay acreage may also have shifted to corn as producers responded to higher prices.
According to the Ukrainian Ministry of Agrarian Policy and Food, the country will export about 14.8 million metric tons for the year ending Oct. 1, nearing Ukraine’s level of corn exports for 2011-12.
Export prospects are also increasing from South America, largely because of more corn from Brazil. Brazil’s corn crop is also estimated by USDA at 3 million tons more than previously thought. The USDA indicated this increase could raise South American shipments during the late summer and early fall.
While the United States will regain its competitiveness as a corn exporter when harvest begins replenishing stocks, Brazil’s and Ukraine’s increased corn production this season will not help global corn prices. The Linn Group’s Jerrod Kitt said the downward pressure from increased global supply will continue to be felt after harvest.
“I wouldn’t be surprised if we maybe test a new low, post-harvest, at $4,” he speculated.
Corn is not the only crop affected by increased global production, as South America’s soybean output continues to rise. Brazil and Argentina will export a total quantity of soybeans and soybean meal more than 70 percent larger than the United States during this trade year, said Bill Tierney, Ag Resource Co.
“And perhaps next year, or certainly the year after that, Brazil will be the world’s largest soybean producer,” he added.