Global corn, soy crops seen as plentiful
Nov. 15, 2016
As the fall harvest of record large corn and soybean crops wraps up in the United States, planting is under way across the Southern Hemisphere and specifically in South America, the primary competition for U.S. soybean exports, and an early harvest of both crops is anticipated.
As has been the case in the United States, crops also are abundant if not record large globally. The United States is the world’s largest soybean producer and second largest exporter. Brazil is the world’s largest soybean exporter and second largest producer. Argentina is the world’s third largest soybean producer and exporter, and the world’s largest soybean oil and soybean meal exporter, followed by Brazil and the United States in both cases. Soybean crops in the United States and Brazil are expected to be record large in 2016-17, according to the U.S. Department of Agriculture.
Those two countries account for 66% of global soybean production; add in Argentina and the three countries account for 83%. The three countries combined account for 89% of global soybean exports. The key to the export market of course is China, which accounts for 63% of global soybean imports.
Planting of soybeans in Brazil for harvest in 2017 was more than 50% completed overall and over 80% in some key areas last week, ahead of average and well ahead of last year, according to private reports from Brazil. Early planting will allow for early harvest, likely to begin in December this year, which will allow soybeans to compete with U.S. supply in the global export market sooner than the usual February-March time period.
The situation is much the same for corn, with early planting expected to result in early harvest. Parts of Brazil produce two corn crops annually, with planting of the summer corn crop completed in some areas.
The United States is by far the world’s largest corn exporter, accounting for about 40% of the total. But Argentina is expected to pass Brazil as the No. 2 exporter in 2016-17 after adverse weather in Brazil knocked the 2015-16 crop down by 21% from 2014-15. China is the world’s second largest corn producer after the United States but uses nearly all of its crop domestically. Brazil is the world’s fourth largest corn producer and Argentina the sixth largest.
As in the United States, grain and oilseed prices affect planting decisions. Early prognostications suggest soybeans will be favored over corn in the United States in 2017. In South America, market conditions currently favor corn over soybeans, according to the U.S.D.A.
“In Argentina, export taxes and quantitative restrictions were removed for corn but remain for soybeans,” the U.S.D.A. said in its Grain: World Markets and Trade report last week. “In Brazil, domestic prices remain elevated, reflecting tight corn supplies. The extent to which farmers respond to current market signals as planting progresses in the Southern Hemisphere could yet impact the already large global supply outlook.”
In its Nov. 9 World Agricultural Supply and Demand Estimates report, the U.S.D.A. raised from October its forecast of U.S. soybean exports, left Brazil unchanged and lowered Argentina. The U.S.D.A. left its 2016-17 corn export forecasts unchanged from October for all three countries, although exports were up a combined 26% from 2015-16.
Despite the record domestic and global production forecasts, the U.S.D.A. raised from October its forecasts of average prices paid to U.S. farmers for corn and soybeans in 2016-17 based on higher-than-expected early season prices.