Corn: South American Supplies Will Take a Role?
Reading time: 2 minutes
The Corn market is projected to record a CAGR of 4.2% during the forecast period 2022-2027, according to the Mordor Intelligence. Corn represents the most crucial crop based on hybrid breeding. Corn is cultivated on nearly 190 million hectares in about 165 countries with wide diversity and management practices and accounts for 39% of the global grain production, primarily used for livestock and feed purposes. While the number of field farms for Corn has declined in recent years, the acreage per Corn farm increased.
North America is expected to be the largest market for Corn, followed by Asia-Pacific, over the next few years owing to the high production of Corn crops and its consumption as animal feed. According to the Food and Agricultural Organization, in 2020, the United States was the largest producer of Corn, with 360.2 million tons, accounting for 31% of the total global production, and Corn is the driver of the US economy. Most of the Corn consumed in the region is used as the primary energy ingredient for livestock feed, followed by sorghum and wheat.
In the trade year 2021/22, global trade shipments of Corn amounted to over 181 million tons. The United States exported over 73 million metric tons of Corn that year, accounting for more than a third of total Corn exports worldwide. Also, the United States is the leading consumer of Corn worldwide. In 2021/2022, the country consumed about 12.4 billion bushels of Corn. China, the runner-up, consumed approximately 11.6 billion bushels of Corn in that year. Corn is the primary US feed grain, accounting for over 95% of feed grain production and use.
According to Agflow data, China (14.8 million tons), Mexico (13 million tons), and Japan (8.2 million tons) were the top 3 export markets of US Corn in 2022. The US domestic Corn consumption is forecast at 309 million tons, whereas production is projected at 368.4 million tons, the USDA data shows.
Population growth, rising incomes in developing nations, and urbanization led to a surge in global livestock consumption. Increasing pressure on the livestock industry intensified in recent years to meet the rising demand for meat and high-value animal protein. For instance, in India, dairy farmers have increasingly replaced local, low-yielding dairy cattle breeds with higher-yielding crossbred cows and buffaloes to improve milk yields. Corn is one of the critical ingredients of almost every compound feed for animal types, such as ruminants, poultry swine, and aquaculture.
South American Corn
The EU and US Corn production has been dramatically affected by hot and dry weather earlier in the season. According to the USDA World Agricultural Supply and Demand Estimates (WASDE), EU and US Corn exports for the 2022/23 season are forecast to be down 53.4% (-3.1 million tons) and 8.1% (-5.1 million tons) from the previous year, respectively. Currently, the global Corn (excluding China) 2022/23 stocks-to-use ratio sits at 11.1%, down from 11.5% last year. The market will be relying on the ample South American supplies coming to market going into 2023.
With such tight supply across the northern hemisphere, high global Corn prices are likely to be pressured by more extensive than expected South American crops. In the WASDE report, the USDA pegged Argentinian and Brazilian production at 55 million tons and 126 million tons for the 2022/23 season, up 3.8% and 8.6%, respectively, from the previous year. However, these figures could change as plantings progress, especially as the market head into the third successive year of La Niña, which brings dry and cold weather to the region.
Other sources: AHDB
Try AgFlow Free
Access Free On Updates for Corn, Wheat, Soybean,
Barley, and Sunflower Oil.
No Credit Card Required & Unlimited Access In Time