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US upgrades South America as rival in corn, wheat exports

The US grip on world corn and wheat exports is to ease faster than had been thought, thanks to enhanced South American competition, US officials said – even  as market worries mount over Mexico shifting its orders.

The US Department of Agriculture, in a much-watched long-term projections report, trimmed its forecast for US wheat exports as of 2025-26 by 600,000 tonnes to 27.4m tonnes.

For corn, the figure was slashed by 3.2m tonnes to 54.6m tonnes, with reductions for rice and sorghum too.

The revisions mean that the US is foreseeing capturing 33% of world corn exports in nine seasons' time, down from an estimate of 39% made a year ago.

In wheat, the US forecasts its export market share at 14.1%, down 0.9 points from it expectations a year ago.

Argentine growth spurt

The downgrades reflect in part, in wheat, mounting competition from the former Soviet Union, which is showing "the fastest growth in world export share", seen rising from 12% in the late 1990s to 29% in a decade's time.

USDA forecasts for US crop market exports and (change on year-ago forecast)

Corn: 54.6m tonnes, (-3.2m tonnes)

Wheat: 27.4m tonnes, (-600,000 tonnes)

Soybeans: 58.5m tonnes, (+6.1m tonnes)

However, the USDA also hiked by 71%, to 12.5m tonnes, its forecast for Argentine wheat exports in 2025-26, citing the boost to the South American country's production prospects from agricultural reforms, such as ditching grain export taxes, brought in by Mauricio Macri's government.

"These policy changes are expected to affect… global agricultural markets," the USDA said.

"Without the added cost of export taxes, Argentina's corn and wheat farmers could generate more income," while peso devaluation following currency liberalisation has boosted values, in domestic terms, of crops traded internationally in dollars.

'Dramatic increase'

Argentina's "wheat area is projected to expand, especially in areas where it can be double-cropped after soybeans", the USDA said.

USDA forecasts for Argentine crop market exports and (change on year-ago forecast)

Corn: 29.7m tonnes, (+9.4m tonnes)

Wheat: 12.5m tonnes, (+5.2m tonnes)

Soybeans: 11.7m tonnes, (-900,000 tonnes)

In corn, area expansion "motivated by the termination of export controls" will see the country's corn production "increase dramatically", driving exports to 29.7m tonnes in 2025-26 – an upgrade of 46% on the forecast made a year ago.

The forecast for Brazil's corn exports on that timeframe was also raised significantly, by 22% to 37.2m tonnes, with the USDA flagging the potential for raised output of safrinha crop, the main source of the country's exports.

The USDA foresaw that "production of second-crop corn following soybeans, much of which takes place in the Centre West, continues with expansion onto new cropland".

Mexico fears

The comments come as the potential switch of crop import demand to South America from the US is a hot topic in markets, with the threats by some Mexican politicians to look south for purchases rather than north, in retaliation for perceived attacks from US President Donald Trump.

USDA forecasts for Braziian crop market exports and (change on year-ago forecast)

Corn: 37.2m tonnes, (+6.1m tonnes)

Soybeans: 85.9m tonnes, (+9.5m tonnes)

Mexico's agriculture secretary, Jose Calzada, said on Thursday that he would within the next 20 days lead a delegation to Argentina and Brazil, aimed at reducing Mexico's dependence on US corn imports.

"US farmers could find themselves unable to sell their corn," Commerzbank said, noting that in 2015-16 "the US shipped no less than 13.6m tonnes of corn to Mexico, meaning that nearly 30% of US corn exports went to the country's southern neighbour".

However, Terry Reilly at US broker Futures International was more sanguine, saying that if South America does decide to divert corn to Mexico to" fulfil an annual consumption of 37-40m tonnes, expect major importers that buy South American corn to switch to the US".

That said, Mr Reilly flagged that US prices could come under pressure to lure alternative importers.

Soybean, cotton outlooks

The USDA was more upbeat, in its long-term forecasts, on prospects for US soybean exports, hiking its estimate for shipments in 2025-16 by 11.6% to 58.5m tonnes.

While the forecast for Brazil's soybean shipments was raised by 15.8% to 85.9m tonnes, that for Argentina was reduced to 11.7m tonnes, with the country seen remaining "a distant third" in world exports.

The US was forecast accounting for one-third of world soybean shipments in nine seasons' time, marginally higher than the estimate made last year.

In cotton too, the estimate for US shipments in 2025-26 was raised, by 12.7% to 12.4m bales.

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