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How will the corn export market change in the next decade?

Contributed by Robert Tigner Published on 26 July 2019

An interesting article recently published by Fabio Mattos, UNL grain economist, discussed changes that have happened and are likely to continue to happen in the world’s corn export market as Brazil further develops its corn production.

Mattos points out that Brazil now exports 20 million metric tons of maize up from almost no exports 20 years ago. At the same time, Brazil has increased its maize production fourfold. A large part of that maize expansion has been in its safrinha or winter crop.

The safrinha crop enters the world export market at the same time that the U.S. corn crop is exported. This pressures U.S. corn prices and is pushing the main corn export period to February-April. Brazilian corn is produced in the country’s center-west and is impacted by poor transportation infrastructure. Mattos calculated Brazilian landed corn costs to Japan as about 15% more than U.S. corn for 2008-12. Soybean costs to Japan for the same period were nearly equal for Brazil and U.S. soybeans.

Brazilian transportation costs were much higher than the U.S., $41 per metric ton higher. Brazilian transportation costs will likely decline as its infrastructure further develops. Mattos also shows that Argentina’s export policies makes its soybeans equal in cost to U.S. soybeans for Japanese importers. If Argentina changes these policy costs, its exports would cost less and possibly undercut U.S. soybeans.

Mattos discusses a recent soybean production area, Matopiba; increases in yield and tillable land; and possible new competitive pressures on U.S. grain exports. Matopiba is a region in northeast Brazil, covering parts of four states, with much closer access to ocean transport, thus lower transport cost to Asian markets.

Take some time to read Fabio Mattos’ article (https://agecon.unl.edu/cornhusker-economics/2019/matopiba-international-grain-markets) and think about the implications to U.S. corn and soybean export competitiveness if Brazilian yields increase and transport costs decline. Also think about our own transportation infrastructure, the Mississippi River locks and dams, and how it could affect U.S. grain exports, prices and U.S. farm profitability.  end mark

View the original article.

Robert Tigner is a University of Nebraska Extension agricultural systems economist and educator. This was originally posted July 24, 2019, on the Red Willow Farm and Ranch Management blog.

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