Decades of US corn export dominance fade as Brazil seizes top supplier crown

US corn export dominance is fading in an increasingly competitive global marketplace as Brazil, aided by a new supply agreement with China, is set to out-ship the US for just the second time ever this season.

Meanwhile, Mexico, America’s other top market, is preparing to limit imports of genetically modified corn that comprises more than 90% of every US harvest.

The eroding export market share spells trouble for the $90 billion US corn industry as domestic demand for feeding livestock and producing ethanol has also cooled. Plantings of America’s most widely grown crop are likely to decline and farm incomes could suffer in the years ahead as a result, analysts said.

“When we look at US corn demand long term, we wonder where new demand is coming from,” said Stephen Nicholson, global grains and oilseeds sector strategist with Rabobank, an agricultural lender.

“Brazil is likely taking a bigger share of the global market, ethanol has likely peaked and animal protein is likely not going to grow fast enough,” he said.

Illinois farmer Richard Guebert is concerned.

“We need a good export market for our corn. The seed technology in Brazil is getting better and better each and every year. They’re not going away,” he said.

Shrinking corn exports echo challenges faced by US soybeans a decade ago as Brazil ramped up production to feed soaring Chinese demand, eventually capturing the top supplier crown in 2013. The country now typically dominates the global soy export market for eight months of the year or more, undercutting US exports. Brazil is also the world’s top poultry, coffee and sugar exporter.

Brazilian corn exports are expected to flood the global marketplace beginning in July and into the US autumn harvest. The country harvests two corn crops from its tropical soils each year, unlike the US

Despite the limited demand, US farmers expanded corn seeding this year to the largest in a decade, encouraged by lower seed and fertilizer costs and good planting weather, the government said last week. With a record Brazilian crop flooding the market, US corn farmers could see prices fall.

Still, Rabobank forecasts corn plantings will shrink to 88 million acres (356,123 square kilometers) in the next three years from more than 94 million currently, Nicholson said.

China expanded its list of approved Brazilian corn exporting facilities late last year, jumpstarting shipments from Brazil. Before that, the bulk of China’s corn imports had come from the US and Ukraine.

“Brazil has the ability to ramp that planting area up to meet Chinese demand in a way that the United States doesn’t,” said Matthew Roberts, senior grain analyst with consultancy Terrain.

Through mid-June, US corn export sales to China for shipment ahead of the next harvest were down 48% from a year ago, US Department of Agriculture (USDA) data showed.

China’s overall corn imports are down about 10% this year, according to customs data, as buyers there await ample supplies of cheap Brazilian corn in the coming months.

“Brazil’s winning the game right now. We’re just not competitive on price,” said one US export trader, citing Brazilian corn offers that are $30 per metric ton below US Gulf Coast port prices.

Total US corn export sales in April and May were the lowest in at least 22 years, according to weekly USDA export sales data. The period included three weeks in which more purchases were canceled than booked, and the two worst weeks of US corn exports on record.