U.S. exports face increasing global competition

While the U.S. has been the traditional powerhouse in terms of global crop commodity exports, there is more competition popping u around the world every year.

In the near future, U.S. exports are likely to face strong competition from Ukrainian corn and feed wheat exports, according to Cary Sifferath, a U.S. Grains Council regional director. 

“With a record corn crop this year and plenty of feed quality wheat to sell, I would now say Ukraine will have 10 million metric tons (394 million bushels) to as much as 12 million metric tons (473 million bushels) of corn and 7 million metric tons (257 million bushels) of feed wheat available for export,” he said.

Ukrainian farmers are using fertilizer and other inputs more aggressively to increase yields. Capital spending on port facilities and export capacity is also increasing as multinational exporters invest in the region, but Sifferath feels that rail and export facilities could still prove a bottleneck for moving such grain volumes.

“It wasn’t that long ago that the multinational grain companies were wondering if Ukraine was a safe place to invest in facilities, since the government can restrict exports, as it did in 2010,” he explained.

In October, Ukrainian President Viktor Yanukovich cancelled export duties for wheat and corn that had been imposed in July, and Ukrainian officials have talked of exporting 27 million metric tons of grain in 2011/12.

Much of Ukraine’s corn and feed wheat is likely to go to the Mediterranean region, to Israel, Syria, as well as the North African and E.U markets.

“Israel has been a big feed wheat user in the past and is likely to be a big buyer because of low transportation costs from the Black Sea,” Sifferath said. “Egypt, Algeria and Morocco are restricted from importing wheat for feed use, and sales to the EU’s Mediterranean nations will depend on pricing.”

Ukrainian grain is also going further to the East.

“We know the Japanese and Taiwanese have purchased some Ukrainian corn,” Sifferath said. “And Ukrainian feed wheat may have traded into Southeast Asia.”

He noted that feed wheat could also go to South Korea and even China, if the Chinese choose to buy wheat instead of corn to build their grain reserves. There has also been speculation about Ukrainian yellow corn sales to South Africa, another possible source of U.S. competition for corn exports.

Every few years South Africa produces enough corn to compete for export sales. The latest statistics from the South African Grain Information Service show that in the May-April 2010/11 marketing year South Africa exported 1.05 million metric tons (41 million bushels) of white corn and 1.02 million metric tons (40 million bushels) of yellow corn.

Most of the white corn was exported to Sub Saharan Africa with 613,080 metric tons (24 million bushels). South Korea was the largest overseas purchaser at 203,087 metric tons (8 million bushels). Other buyers included Italy, Mexico and Pakistan. South Korea was the largest single buyer of yellow corn (24 million bushels) compared to Sub-Saharan Africa at 5 million bushels and smaller sales to Japan, Taiwan, Spain, Protugal and Kuwait.

In the current marketing year (May–October 2011), South African corn exports have included more than 39.4 million bushels of white corn and 25.5 million bushels of yellow corn. As the main buyer of white corn, Mexico purchased 27.6 million bushels with smaller sales to Italy, Korea and Venezuela. South Korea is the leading purchaser of yellow corn at 11.9 million bushels followed by Taiwan that purchased 6.4 million bushels from South Africa.
Meanwhile, concerns are being raised that production forecasts may be too optimistic and that South Africa could face a very tight stocks situation from January through April, especially for white corn.

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