USDA’s September Crop Report raised the forecast for corn exports to 2.2 billion from 2.1 billion bushels which was the largest increase of any use sector for new crop corn. That level is substantially larger than the 1.850 billion bushel export record for old crop corn. It helped push total use above the 13 billion bushel mark for the first time. The same report also pushed soybean exports slightly higher to 1.280 billion compared to the August report, but that matched the old crop export demand. If global demand for US corn and soybeans is so healthy, what is happening in other grain production areas that is causing that?

If the global market is going to be strong for US grain, are other parts of the world having production problems? USDA’s World Agricultural Supply and Demand Estimates (WASDE) report projects an additional 100 million bushels being exported, pushing to the total to 2.2 billion bushels. The September WASDE report says, (corn) “Exports are raised 100 million bushels with higher projected imports for Canada and lower production in South America.”

Coarse grain supplies, which includes corn, sorghum, barley, and oats, remain steady for the 2009-2010 marketing year, except for an additional supply here in the US that offsets declines in stocks of other countries. USDA reduced its estimates of corn production in China, Brazil, Argentina, Canada, Kenya, and EU-27. Chinese corn production is lowered 2.5 million tons as yield prospects were reduced by extended summer dryness. USDA also lowered its estimates for corn production by 2 million tons in Brazil and by one million tons in Argentina. Those nations are providing more incentives to farmers to grow soybeans instead of corn, therefore planted acreage is expected to decline. Elsewhere around the world, corn production will decline this coming year in Canada, Kenya, and the EU-27.

With reduced production in many areas, coarse grain trade will increase substantially for the coming year, mostly corn. Canada and Kenya will be buying more, but Brazil and Argentina will be selling less, as will the European Union. Coarse grain feeding, compared to wheat feeding, is expected to climb 3 million tons with larger volumes here in the US and more barley feeding in the EU. Global corn ending stocks are projected to decline by 2.4 million tons in 2009-2010.

Regarding oilseeds, the US will have higher production, a higher crush, and more exports of soybean meal and soybeans. Exports are expected to increase because the soybean crop in India is down, along with exportable supplies. US exports are projected at 1.28 billion bushels as a result of declines in foreign production, which is down 1.2 million tons to 326.9 million. However global production is expected reach a record level of 243.9 million tons due to large crops in the US and a large crop expected in Brazil. Those are partly offset by reductions in the soybean crops in China, India, and Canada. Brazilian production is projected at 62 million tons, Chinese production at 15 million and India at 9 million tons. USDA says, “A late start to planting resulted in lower-than-expected area sown. Lower yields are projected due to a period of dryness in late July and early August.”

Global oilseed trade will climb slightly during the coming year to reflect increased imports by China. Global stocks are expected to climb due to higher stocks in China and the US, which are only partly offset by lower stocks in Argentina and India. China’s imports are expected to reach a record 39.8 million tons.

Summary:
Although the Federal Reserve has declared the recession to be history, there are still some demand weaknesses in the US corn and soybean crop. Corn exports are expected to be slightly higher helped by a short crop in Canada, which will be a customer, and reduced production in Brazil and Argentina which will reduce competition. China will continue to be a strong customer of US soybeans, and the short crop in India will reduce completion from that part of the world.

Source: Stu Ellis, University of Illinois