Corn exports down as trade wars continue

Source: By Robert Pore, Grand Island Independent • Posted: Sunday, October 27, 2019

But there are other challenges facing farmers.

“As farmers harvest our 2019 corn crop we need to be aware that as of Oct. 17 accumulated U.S. corn exports (quantities shipped) were only 37 percent of year ago levels,” said Gale Lush, American Corn Growers Foundation (ACGF) chairman of Wilcox. Lush is a corn, soybean and wheat farmer.

“Apparently, today’s new policymakers have yet to learn the hard lesson that trade wars are not easy to win,” he said. “In fact, trade wars come with a tremendous cost to farmers and the rural economy.”

He said that “China is not rushing to sign a new trade deal with the U.S.” He cites Bloomberg News’ Oct. 24 report that China will buy around $20 billion in U.S. farm goods in a year if a partial deal is completed.

Lush said $20 billion is less than what China bought from the U.S. before Trump’s trade war.

“It will take us years to regain the exports he lost,” he said. “I don’t call this winning. U.S. consumers also pay the trade war’s import tariffs. The only winning some corn farmers might do this year is if they are lucky enough to have a good crop while bad weather in other regions reduces the national corn crop and raises prices.”

Lush said the Trump administration’s decision to withdraw from the Transpacific Partnership (TPP) trade agreement in 2017 was a mistake.

He said TPP included the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

“We were still part of that trade agreement in 2016,” Lush said. “It would have put us in a stronger, competitive position to access those import markets and compete with Canada and Australia for grain exports to Japan, a key import market.”

He said that as of Oct. 17, U.S. accumulated corn exports to Japan are only 605,000 metric tons compared to 1.574 million metric tons at the same time one year ago. Outstanding U.S. corn export sales to Japan are only 924,900 metric tons compared to 1.750 million metric tons last year at this time.

“The U.S. is again getting put in the position of being a residual export supplier to world markets,” he said. “That is not ‘winner’ status for U.S. farmers.”

ACGF Policy Director Dan McGuire said the USDA Export Sales report showed “more negative market news than just accumulated corn exports being only 37 percent of year ago levels (8.4 million metric tons last year vs. 3.12 million metric tons this year.)”

McGuire said that same report showed that outstanding or yet-to-be-shipped corn export sales were only 60 percent of year ago levels (12.94 million metric tons last year at this same time vs. 7.72 million metric tons this year).

“Taken together, lower accumulated corn export quantities combined with lower outstanding corn export sales quantities as of Oct. 17, compared to year ago levels, show that corn exports are running about 417 million bushels behind last year and that’s a big negative factor hanging over corn prices,” he said.

McGuire noted that the Oct. 12 USDA World Agricultural Supply-Demand Estimate projects 2019/2020 marketing year corn exports to reach only 1.9 billion bushels, down from 2.065 billion bushels in 2018/2019 and 538 million bushels less than the 2.438 billion bushels reached in 2017/2018.

He said using 2017/18 as a reference corn export year and combining the 373 million bushels of lower exports from 2017/2018 to 2018/2019 with the 538 million bushel less quantity projected in 2019/20, “it’s an export loss of 911 million bushels over just those two years.”

McGuire said that same Oct. 12 USDA report projects corn use for ethanol to reach only 5.4 billion bushels, 205 million bushels less than in 2017/2018.

He said 2018/2019 corn use for ethanol was 229 million bushels less than 2017/2018. Using 2017/2018 as a reference year, McGuire said reduced exports combined with lower corn use for ethanol in 2019/2020 equals over 1 billion bushels less cumulative corn demand resulting in over 1.9 billion bushels of projected corn ending stocks (year-end inventory) and projected average farm prices for corn of only $3.80 per bushel.

“It’s well past time that the administration in Washington, D.C., enact policies to dramatically increase the amount of corn used for ethanol right here in the domestic U.S. market,” McGuire said.

He said the same decision makers that enacted the trade policies and trade wars that caused U.S. farmers to lose export markets have used ethanol blending waivers to reduce corn used in ethanol.

“They are obligated to quickly take the necessary steps that will greatly increase annual corn use for ethanol by at least 1 billion bushels, and that’s just playing catch up,” McGuire said. “Corn export and ethanol use and demand are headed in absolutely the wrong direction. Increasing corn demand in the domestic U.S. ethanol market via the Renewable Fuels Standard (RFS) should be a no-brainer for policy makers if they’re actually serious about increasing corn demand and corn prices to increase farm income in support of the rural economy.”