USDA: coarse grains

Global corn production is up with larger crops in the European Union and Ukraine more than offsetting a smaller crop in China. Global trade is higher than last month as the additional production in the European Union and Ukraine translates to more exports and as Brazil’s volumes exceed expectations. Global imports are up on higher imports for Egypt, Iran, Saudi Arabia, and the United Kingdom. The U.S. season-average farm price is unchanged at $5.45 per bushel.

Since the November WASDE, major exporters’ bids initially declined on fears over the spread of the Omicron variant of COVID-19; however, bids rebounded in early December in North and South America. Argentine bids are up $7/ton to $255 and Brazilian bids are up $11/ton to $270 on good late-season export demand. U.S. bids rose $8/ton to $268 as continued demand from domestic processors and reports of export sales of 1.0 million tons in the week ending November 25 underpinned price support. Ukrainian bids remained relatively unchanged, settling in at $278, down $2/ton.

For the second consecutive year and the third time in 5 years, total U.S. hay exports (HS Codes 1214900010/15) in 2020/21 (Oct-Sep) eclipsed 4 million tons. This was accomplished largely because of increased purchases from China after 2 years of weaker demand. Alfalfa hay exports to all trade partners in 2020/21 totaled a record 2.77 million metric tons. In 2020/21, China imported a record volume of alfalfa hay from the United States. Driven by strong consumer demand for dairy products, China’s dairy farming industry is experiencing rapid expansion and increasing herd size. Demand for forage products is rising as large, modern dairy farms use more high-quality forages such as alfalfa, timothy hay, and oat grass. China imposes a 7 percent tariff on U.S. alfalfa hay, which is in addition to the 25 percent retaliatory duties in response to Section 301 tariffs; however, importers are eligible to request exemptions through an online application. U.S. alfalfa exports were only slightly affected by additional tariffs due to customer preferences for high-quality alfalfa hay and sufficient supply. In total, China imported 1.5 million tons of alfalfa hay from the United States, eclipsing its previous high set in 2016/17 by 265,000 tons. The gains made in U.S. hay exports to China more than offset declines for the rest of the world.

Japan is the second-largest importer of U.S. hay, but imports were relatively flat year-over-year, down nearly 10,000 tons from 2019/20. Japan leads all export partners for non-alfalfa hay. Imports were 836,000 tons in 2020/21, 4 percent more than the previous year and the third year in a row of volume growth. Saudi Arabia, the fourth-largest importer of U.S. alfalfa hay, had a year-over-year volume decline for the second year in a row. The country imported 235,000 tons of U.S. alfalfa in 2020/21, down 27 percent from 2019/20, and marks the smallest volume since 2016/17. South Korea, the second-leading importer of non-alfalfa hay, finished the year with a total of 312,000 tons, which was down 9 percent compared to the previous year, and the country’s fourth year in a row of declining grass hay imports from the United States.

Starch (HS 110812) accounts for about 70 percent of a dry corn kernel. Extracted via the wet-milling process, corn starch is widely used in food manufacturing as well as in textiles, pharmaceuticals, cosmetics, biodegradable packaging, and other industrial goods. After years of continuous growth, global trade fell 10 percent in 2020/21. Exports from China were at the smallest volume since 2016/17, while India became the top exporter. Since the removal of the support price for corn in China, wet milling (known as “deep-processing” in China) benefitted from ample milling capacity, large stocks of corn, support from central and provincial governments in the form of discounted corn supplies, and subsidies on transportation. Throughout 2020/21, however, the national average for domestic corn prices steadily rose . After setting a record at
$453 per ton in May 2021, prices have declined but remain above $400 per ton. Strong prices for domestic corn likely pushed up costs and eroded returns for processors as most processing plants are not located to take advantage of cheaper imported corn. For India, wet milling has been an important economic operation, supported by demand for corn starch primarily in textiles and pharmaceuticals. Moreover, record production of corn in 2020/21 combined with weak demand for feed from the poultry sector kept corn prices below the minimum support price of 18,500 rupees ($247) per ton. The wet milling sector is relatively small in India. Nevertheless, it seemed that the sector took advantage of converging domestic and global market dynamics, supported by growing demand in Southeast Asian countries.

USDA

Tags: alfalfa hay, corn, export, WASDE, corn production, EXPORT SALES