The international corn trade is undergoing a dramatic and profound shift. U.S. corn is more than ever before being shipped to Europe, Japan and South Korea. Right now, China is pouring on the effort to wean itself off of American-grown fruits and vegetables. They’re sourcing more of their staple crops from producers in South America.
U.S. corn is a staple of animal feed, and it has an increasingly important role in bioethanol production. It’s been one of the United States’ biggest economic exports for decades. Recent shifts in the way China is buying have started to change the market’s fortunes. Chinese demand has vanished, putting the squeeze on U.S. corn prices. Those prices have fallen because of this shift in purchasing behavior.
China has turned its focus to South American suppliers. As such, U.S. farmers are looking for new markets to dump their excess corn. The increase in exports to Europe, Japan, and South Korea reflects an effort to stabilize corn prices despite the loss of a major buyer. These countries are now realizing the benefits of U.S. corn, whether it’s for livestock feed or producing cleaner-burning renewable fuels.
Trade conflicts between the United States and China have escalated in recent years. Beijing, in turn, is pursuing food security bolstering measures by actively diversifying its agricultural import sources. China is increasing its imports from South America. In return, U.S. corn exporters need to be nimble and find new opportunities in other parts of the world.
The strong pace of U.S. corn exports is still adding to upward pricing pressures in the market. In general, U.S. corn still looks competitively priced against global suppliers. As welcome as that may be for many feed producers, China’s diminished dependence on U.S. corn drives uncertainty for the majority of growers. This unfortunate development has put the vulnerability of U.S. agriculture under a spotlight against the backdrop of increasingly shifting international trade relationships.
The implications of these changes go well past increased costs. They’re shaping international agricultural policies. Countries are rethinking their supply chains and searching for like-minded new partners. In order for U.S. farmers to remain competitive in the world market, they need to continue to be the most innovative agricultural producers.