The weakening grip of the US on world crop exports will stoke
grain price volatility by raising the importance of countries with less stringent
agricultural reporting, raising the risk of market surprises.
The US, while remaining a major force in crop exports, has
lost market share in shipments of all three major crops, corn, soybeans and
wheat, over the past decade, largely to South America and the former Soviet
In wheat, even though US exports are expected to approach
30m tonnes in 2013-14, they will remain well below the record 48.2m tonnes set
32 years ago.
Although corn and soybean exports were depressed in 2012-13
by drought-hit harvests, they are not expected to recover enough to return to
the US its historical grip, against rising Ukrainian corn shipments and, for soybeans,
the surge in Brazilian output and trade.
"We have lost this dominance that the US has had on the
grain markets," Jack Watts, senior analyst at the UK's HGCA crop bureau, said.
In corn, "as production longer terms steps up in the Ukraine,
you dilute the dominance of the US" he told reporters at the bureau's grain
markets outlook conference in London.
The dynamic was also a factor of the US becoming "focused
more on domestic consumption" of its crops, through factors such as ethanol output,
which has helped US corn demand soar 39% to 279.0m tonnes in the decade to
2011-12, Macquarie analyst Chris Gadd said.
"That leaves less for exporters."
'Bigger price shocks'
Mr Watts had earlier told the conference that since the US
is "not as dominant as it was, that introduces uncertainty and the possibility
He told reporters: "We are not going to get the same level
of transparency [from rising grain exporting countries] as out of the US, which
is the most transparent in the world."
That matters because a dearth of data might allow markets to
price in a situation "which may not be physically replicated".
The growth in importance of markets in which data is monthly,
or quarterly, rather than a US Department of Agriculture regime which sees
weekly data in the likes of crop condition and harvest progress, and daily data
on some livestock dynamics, means a "big lump" of statistics appearing at one.
This increases the threat "of bigger price shocks to the
market", Mr Watts said.
'Still seen as the
Even though the US grip on physical trading in major grains
is weakening, the country's futures markets look unlikely to lose their
importance in setting international prices, Mr Gadd said.
US contracts "are still seen as the benchmarks. That's where
the liquidity exists".