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