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Lynett Oliver

South American Exports Threaten US Position as King of Corn

by Lynett Oliver | Dun & Bradstreet Editor

June 22, 2016 | No Comments »

The US has long supplied the world with corn as the top exporter and global producer. But Brazil and Argentina have slowly been closing in on that position. In fact, during the drought of 2012-13 that gripped the American heartland, Brazil actually took the top spot. Changes made by new regimes in both of America’s neighbors far to the south could lead to a more permanent reordering of world corn powers.

Brazil is the world’s third-largest producer of corn and its second-largest exporter, a position it achieved just two years ago. The USDA expects it to remain the #2 exporter through 2025, ahead of Argentina and Uruguay. A combination of the falling value of Brazil’s currency, the real, along with government support in the way of improved transportation options, and even investment from China, have combined to give the country a real boost in corn production.

A June report from the USDA says Brazilian corn exports have increased 21% each year for the last decade. It’s not just that the country is producing more corn, it’s also the timing. It plants a “second crop” later in the year, in a different region of the country, that brings a fresh crop of corn to the international market at a time when US farmers are already facing low postseason prices.

Argentina has benefited from a new government, which made clear from the outset that it intended to be more pro-business and improve the economy. It started by eliminating currency controls, leading to a 45% devaluation of the country’s currency, which boosted the competitiveness of exports, including corn. Next, it reduced export taxes on many agricultural products and completely eliminated them for corn.

Finally, Argentina changed the permitting, tracking, and reporting system for exports, effectively boosting the price farmers receive for corn, according to the US Grains Council (USCG). The USDA expects the policy changes to soon make that country’s agricultural heartland the lowest-cost corn exporter in the world.

Is there an upside to all this for US farmers? Maybe. Reports in May and June from the USDA, the USCG, and National Corn Growers Association all point to rising corn sales, exports, and prices as well as higher yields per acre for US farmers.

Industry Impact: US corn farmers may want to look into ways to increase productivity or explore shifting some corn production to other crops, such as soybeans, which are being squeezed out by corn production in Brazil and Argentina.

Lynett Oliver is an Industry Specialist with D&B’s First Research, where she covers the oil, agriculture, and mining industries, mostly. Prior to that, she covered companies in a variety of industries for D&B’s Hoover’s. She’s also written for local publications, created training materials for Walt Disney World, and played a lot of board games. You can read her shorter musings on Twitter.


Photo by Alejandro Barrón, used here under a Creative Commons license.

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