Improved weather cannot repair all the damage that last year's
drought did to US agriculture.
Sure, prospects for US spring crops - assuming they get in the
ground - look far better than they did at the start of the year, when more than
half the Midwest was still suffering from the drought which sent crop yields
slumping last year.
Now just 10.4% of the Midwest is in drought, a factor
reflected in US Department of Agriculture forecasts for record domestic corn and
soybean harvests this year.
But even assuming these estimates are reached, US
agriculture appears to have lost something it is not getting back - and that is
share of export markets.
Sure, the US is to remain a huge power in crop trade.
It will regain in 2013-14 its top place among corn exporters
lost this season.
But its share of the world market, at 32%, will be - bar
last year's drought-affected result – the lowest on records going back to the 1960s,
according to USDA expectations.
The average of the previous 10 years was a 52% share of the
world corn market.
In soybeans, the US will remain in the second place it fell
to in 2012-13, forecast to record a share of 37% of global trade, still behind Brazil, and below the 43% average recorded
for the previous decade.
The trouble for the US is that last year's drought, in
leaving the country unable to meet the demands of its traditional foreign buyers,
force importers to overcome suspicion, prejudice or habit and seek alternative
Some importers have got used to the set up, and aren't
coming back, at least for such a big portion of their needs.
China, for instance, in soybeans, of which it is the top
importer, is adding Argentina to its list of approved sellers. Brazil has
already overtaken the US as the major origin for Chinese soybean purchases.
In corn, the quest for fresh suppliers has fuelled the rise
Ukraine as a force in the grain, with a market share of world exports of 16%
forecast for 2013-14, up from a 5.5% share two seasons ago.
That matters, as America's own demand is not enough to mop
up all the extra domestic supplies, even in corn, of which the USDA forecasts a
jump of nearly 12% in US consumption.
And rising supplies means less competition for crops, and
weaker prices – as the USDA indeed, has forecast.
There could be longer-term effects over values too. If
America's grip on world crop trade continues to weaken, the country will find
it loses some of its power over market pricing.
Up to now, farmers in America have been compensated for poor
harvests by higher prices for what they do produce, besides by crop insurance.
But that impact would wane if the US declines as such a
It is difficult to see the US being anything less than an
But its farmers may find themselves a little more exposed to
the setback, to which more minor farming nations are vulnerable, of both weak
crops and disappointing prices.
(UK rapeseed and wheat growers, for example, could suffer
such a double whammy this year.)
The winners, of course, are buyers, for which a broader
spread of suppliers reduces the risk of being held to ransom by a single
weather threat, and allows them better ability to play off exporters against