Brazil Challenging U.S. Corn Export Top Spot

Brazil Challenging U.S. Corn Export Top Spot

The U.S. has been the top corn exporter for a long time averaging around 45 percent of the world corn exports since 2000 with a high of 67 percent in 2005 (Figure 1).  The one exception since the turn of the century was in 2012; the most severe drought since the 1950s reduced corn production by over 13 percent in the largest producing states.  On the other hand, Brazil has increased its corn exports rapidly through the years securing the number two spot.  Brazil’s participation in the corn export market is quite remarkable. In 2000, corn exports from Brazil accounted for only 8.2 percent of the world total and reached its lowest volume of exports in 2004 with less than one percent. Brazil bounced back after claiming the top spot in 2012 and challenged the United States.  Currently, Brazil exports reached 47 million metric tons compared to 48.9 million metric tons for the United States, accounting for 26.4 and 27.4 percent of total world corn exports, respectively. 

The top world corn importers are EU, China, Mexico, Japan, and South Korea accounting for 47.2 percent (Figure 2).  Similar to Brazil in the exporting market, China’s rise as a major corn importer is remarkable.  China had nearly zero corn imports from 2000 to 2008, then gradually increased its share reaching around five percent in 2011, 2014, and 2019, and finally exploding as a top market for corn in 2020 and 2021.  Currently, China occupies the number two spot between the EU and Mexico.  U.S. corn exports to China earlier this month were around 70 percent shorter than at the same point in the previous two years.  On the other hand, Brazil corn shipments to China last month reached over one million metric tons and is on track to repeat the same amount this month.  Although Brazil exports to China seem to be coming at the expense of the United States, China’s continued purchases are a good sign for the world corn market.

Figure 1. Major World Exporters of Corn, MY 2012/13 – MY 2022/23

Source: Production, Supply, and Distribution (PS&D); USDA-FAS

Figure 2. Major World Importers of Corn, MY 2012/13 – MY 2022/23

Source: Production, Supply, and Distribution (PS&D); USDA-FAS

Author: Luis A. Ribera

Professor and Director

Center for North American Studies

Texas A&M University


Ribera, Luis. “Brazil Challenging U.S. Corn Export Top Spot.Southern Ag Today 3(4.4). January 26, 2023. Permalink

China’s imports of U.S. Beef continue to increase. But how does the U.S. compare to other competing countries?

China’s imports of U.S. Beef continue to increase. But how does the U.S. compare to other competing countries?

In a previous article, I highlighted that China’s demand for beef is breaking records and imports have increased to unprecedented levels in recent years. Since 2010, Chinese beef imports increased from about $100 million to nearly $16.6 billion by 2022 (nearly a 16,000% increase), making China the world’s largest beef importing country (Trade Data Monitor®, 2023; UN Comtrade, 2022). In years past, beef was not a major protein source in China, but economic growth and exposure to western diets has increased beef awareness. Due to several factors (higher incomes, health awareness, protein shortages due to African swine fever), Chinese consumers have diversified their diets away from pork, the traditional animal protein. Beef demand is outstripping supply in China, resulting in rising imports. As mentioned in the previous article, U.S. beef exports to China have significantly increased as a result. But how does the U.S. compare to other beef exporting countries in the Chinese market?

Figure 1 shows the value (in billions) of China’s beef imports by major exporting source: Argentina, Australia, Brazil, New Zealand, Uruguay, United States, and Rest of WorldRest of World is an aggregation of all other countries. Note that Chinese imports of U.S. beef products in 2022 were $1.7 billion, making China a leading destination market for the U.S. From the Chinese perspective, however, this was about 10% of China’s total imports, making the U.S. China’s 4th leading supplier ahead of Australia ($1.5 billion, 9%) and New Zealand ($1.4 billion, 8%). The figure shows that South American countries are more dominant in the Chinese market (Argentina – $2.5 billion, 15%; Uruguay – $1.8 billion, 11%). This is especially true for Brazil. In 2022, China imported nearly $7.0 billion of beef products from Brazil. No other country comes close (40% of China’s beef imports). What’s interesting is that both Brazilian and U.S. beef were banned in China due to animal disease issues (e.g., FMD, BSE). While the U.S. recovery since 2017 has been noteworthy, Brazil’s recovery since 2014 has been quite extraordinary.

Figure 1. Chinese beef and beef product imports by exporting source: 2010-2022

Source: Trade Data Monitor®

References

UN Comtrade (2022). UN Comtrade Databasehttps://comtrade.un.org/

Trade Data Monitor (2023). https://www.tradedatamonitor.com/

Muhammad, Andrew. China Emerges as a Leading Destination for U.S. Beef Exports. Southern Ag Today 2(49.4). December 1, 2022. https://southernagtoday.org/2022/12/china-emerges-as-a-leading-destination-for-u-s-beef-exports/

Author: Andrew Muhammad

Professor and Blasingame Chair of Excellence

The University of Tennessee


Muhammad, Andrew. “China’s imports of U.S. beef continue to increase. But how does the U.S. compare to other competing countries?Southern Ag Today 3(2.4). January 12, 2023. Permalink

U.S. Agricultural Trade Deficit Projected for 2023

U.S. Agricultural Trade Deficit Projected for 2023

According to the USDA, U.S. agricultural exports are projected to decline by $2.5 billion from $196 billion in Fiscal Year (FY) 2022 (forecasted) to 193.5 billion in FY 2023. At the same time, agricultural imports are projected to expand by $5 billion from $192 billion in FY 2022 (forecasted) to $197 billion in FY 2023. The result is an agricultural trade deficit of $3.5 billion—the second largest deficit since 1990.

The primary macroeconomic factors driving these trade relationships are the persistent strength of the U.S. dollar relative to other major currencies, like the Euro and the Yen, and the sluggish economic performance in many parts of the world. In the short-term, poor economic growth will likely be exacerbated as central banks around the world tighten monetary policy to fight rising inflation rates. Moreover, while global supply chain crises have gradually faded this year, freight and shipping costs remain heightened as a result of hefty energy prices driven by the ongoing Russian invasion of Ukraine. 

Alongside these macroeconomic factors, the drop in U.S. agricultural exports is also the result of tight domestic supplies of cotton, beef, and sorghum. The largest trade losses are expected to be with major trading partners, including the European Union (EU), South Korea, and Egypt, each of whom is expected to lose approximately $300 million in trade. The projected increase in agricultural imports is primarily driven by grain and feed imports (up by $0.9 billion), as well as increased imports of horticultural products (up by $2.9 billion) and sugar and tropical products (up by $1.8 billion).  

K. Aleks Schaefer

Assistant Professor of International Markets, Trade and Policy

aleks.schaefer@okstate.edu

Luis Ribera

Professor and Director Center for North American Studies

lribera@tamu.edu


Schaefer, K. Aleks, and Luis Ribera. “U.S. Agricultural Trade Deficit Projected for 2023.Southern Ag Today 2(53.4). December 29, 2022. Permalink

The U.S. and Brazil in International Beef Markets

The U.S. and Brazil in International Beef Markets

The United States and Brazil are the leading beef exporters (Figure 1). However, they focus on different markets. Figure 2 illustrates the world trade flow value in 2020. Accordingly, China is the leading destination for Brazilian beef ($4.1bn), while Japan is the primary consumer of American meat ($2bn). Nevertheless, the U.S. has a more diversified client portfolio, with relevant exports to Japan (27%[1]), Korea (24%), Mexico (10%), Hong Kong (8.5%), and Canada (7.5%). As for Brazil, most exports are destined for China (50%), Hong Kong (14%), and Egypt (8.7%). 

Figure 1 – 2020 Beef Trade: Top, Growing, and Declining Exporters (Value) 

Source: CHRTD, 2022

The two countries compete in the Hong Kong market more directly, which imported 42% (309k tons) of its beef from Brazil and 11% (81.3k tons) from the U.S. in 2020. However, when we compare the values of meat imports from Hong Kong, Brazil’s share drops to 39% ($1.1bn), and the U.S. rises to 22% ($635m). Boneless beef cuts (frozen) show America’s superior ability to market its product. Worldwide, American frozen beef had an average premium of 24% over Brazilian meat in 2020. In the case of Hong Kong, that year, Brazil exported 182k tons ($771m) and the U.S. 56.9k tons ($462m) of frozen beef, a 92% premium for the American product. Furthermore, the 2020 Phase One Trade Agreement opened the Chinese market to the U.S., bringing competition from the two largest exporters to the most prominent and growing consumer market.

Figure 2 – 2020 World Beef Trade (Value) 

Source: CHRTD, 2022

Unlike Brazil, the U.S. is a significant beef importer (Figure 3), mainly from Canada ($1.8bn), Australia ($1.5bn), and Mexico ($1.5bn). Australia competes for the Korean and Japanese markets with the U.S. and the Chinese markets with Brazil. Beef trade between the U.S. and Brazil is timid, as the U.S. exported $33m to Brazil and imported $154m from the country between 2015 and 2020 (CHRTD, 2022).

Figure 3 – 2020 Beef Trade: Top, Growing, and Declining Importers (Value) 

Source: CHRTD, 2022

[1] The percentages correspond to the total value exported in 2020.

Reference

CHRTD – Chatham House Resource Trade Earth. Trade Data. 2022. Available online: https://resourcetrade.earth/


Author: Yuri Clements Daglia Calil 

Assistant Professor and Extension Specialist

Texas A&M University

yuri.calil@ag.tamu.edu


Clemets Daglia Calil, Yuri . “The U.S. and Brazil in International Beef Markets.Southern Ag Today 2(51.4). December 15, 2022. Permalink

China Emerges as a Leading Destination for U.S. Beef Exports

China Emerges as a Leading Destination for U.S. Beef Exports

China’s demand for beef is breaking records and imports have increased to unprecedented levels in recent years. Since 2010, Chinese beef imports (carcasses and muscle cuts) increased from less than $100 million to nearly $12.5 billion by 2021 (14,000% increase), making China the world’s largest beef importing country (UN Comtrade, 2022). In years past, beef was not a major protein source in China, but economic growth and exposer to western diets has increased beef awareness. Due to several factors (higher incomes, health awareness, protein shortages due to African swine fever), Chinese consumers have diversified their diets away from pork, the traditional animal protein (Muhammad et al. 2022). Beef demand is outstripping supply in China, resulting in rising imports. Consequently, U.S. beef exports to China have increased to record levels.

It was not that long ago that the Chinese government banned U.S. beef after the discovery of bovine spongiform encephalopathy (BSE) in 2003. Almost 14 years later (May 2017), the China government reopened its market to U.S. beef, but not without restrictions. In January 2020, however, the United States and China signed the Phase One Trade Agreement, where China expanded the scope of beef products imported, eliminated age restrictions on slaughtered cattle, and recognized the U.S. beef traceability system. As a result, U.S. beef exports to China significantly grew. Since 2017, U.S. beef exports to China grew from $31 million to $1.6 billion in 2021, an increase of 4,800% increase (Hanzel 2021; USDA, FAS 2022).

Figure 1 shows the volume in metric tons (MT) of U.S. beef and beef product exports to major destination markets: Japan, Mexico, South Korea, Hong Kong, Canada, Taiwan, and China. In 2017, when the Chinese market was reopened to U.S. beef, sales to China were less than 3,000 MT and a fraction of sales to other major markets. In 2021, however, China became the 4th largest destination for U.S. beef and beef product exports (191 thousand MT), behind Japan (318 thousand MT), South Korea (277 thousand), and Mexico (201 thousand). Year-to-date exports in 2022 suggest that China will be the 3rd leading destination, and possibly the 2nd leading destination if this trend continues. Note that exports in 2022 to all major destinations except China have either decreased (Japan, Mexico, and Hong Kong) or remained relatively the same when compared to last year. Exports to China, however, increased to 192 thousand MT as of September 2022, a 39% increase when compared to the previous year. At this rate, U.S. beef exports to China will be on par with South Korea and Japan.

Figure 1. U.S. beef and beef product exports by major destination country: 2017-2022

Source: USDA, Foreign Agricultural Service, Global Agricultural Trade System (GATS) (2022)

References

Hanzel, M. (2021). Beef – New to China Market Product Report. 2021. Report Number: CH2021-0016. U.S. Department of Agriculture, Foreign Agricultural Service.

Muhammad, A., C. Valdes, K. DeLong, and C. Grebitus (2022) “The Rise of Beef Demand in China: How Competitive is U.S. Beef when compared to Brazil and Other Major Exporters?” Arizona Food Industry Journal, Dec. 2022 (forthcoming)

U.S. Department of Agriculture, Foreign Agricultural Service (2022). Global Agricultural Trade System (GATS)https://apps.fas.usda.gov/GATS/default.aspx

Author: Andrew Muhammad

Professor and Blasingame Chair of Excellence

amuhamm4@utk.edu


Muhammad, Andrew . “China Emerges as a Leading Destination for U.S. Beef Exports.Southern Ag Today 2(49.4). December 1, 2022. Permalink

Barge Traffic Restrictions on the Mississippi River and Bulk Agricultural Exports

Barge Traffic Restrictions on the Mississippi River and Bulk Agricultural Exports

The Mississippi River provides the United States with a competitive advantage in the export of bulk agricultural commodities.  This advantage in transportation costs allows U.S. commodities, including corn and soybeans, to better compete for market share with the product of other countries. Disruption of shipping on the Mississippi River can occur as a result of a variety of circumstances.  Various events, particularly hurricanes, have previously suspended barge traffic on the Lower Mississippi River. While the Army Corps of Engineers is charged with maintaining the navigability of the Lower Mississippi River, the possibility of longer-term disruptions resulting from an avulsion of the Mississippi River at the Old River Control Structure has been considered by Lazard and Kennedy (2020).

The recent drought conditions have limited the shipment of agricultural commodities on the Lower Mississippi River due to draft limitations. The Ports of South Louisiana typically service over 55,000 barge shipments and 4,000 ocean-going vessels annually. The disruption of river commerce will force producers to consider shipping commodities using more costly alternative modes of transportation. Assuming the Mississippi River to be the most cost-efficient method of transporting soybeans, other modes of transportation to meet global demands will increase total transportation costs.

The immediate impact on agricultural exports can be seen through decreased barge traffic and increased barge rates.  According to the U.S. Army Corps of Engineers, barge tows that are typically comprised of 36 barges are limited to 25 barges due to the decreased water levels (Kennedy, 2022) which significantly restricts the flow of grain to the Gulf.  In addition, the USDA’s Grain Transportation Report (2022) indicated that the St. Louis barge rate for the week of November 8, 2022 was 145 percent higher than the previous year and 128 percent higher than the 3-year average. 

As shown in Figure 1, nearly half of U.S. bulk agricultural exports flow through the Lower Mississippi River and the Ports of South Louisiana.  The highest export volumes have occurred from October through January, particularly for the New Orleans Customs District (NOCD).  The current drought conditions and resulting restrictions on barge traffic on the Lower Mississippi river will have significant implications for the U.S. agricultural sector.  In addition to other supply chain issues that have existed, increased barge rates and decreased river capacity resulting from the abnormally low Mississippi River levels come at the time for peak export opportunity based on historic export data. Depending on the duration of the current drought conditions, these factors will likely combine to put downward pressure on the domestic prices of bulk agricultural export commodities.

Figure 1. U.S. Total and New Orleans Customs District (NOCD) Bulk Agricultural Exports by Month, Five Year Average in Million Metric Tons.

Source: USDA-FAS (2022). Global Agricultural Trade System (GATS), accessed at https://apps.fas.usda.gov/GATS/on November 16, 2022.

References:

USDA-AMS (November 10, 2022). Grain Transportation Report, accessed online at www.ams.usda.gov/GTR on November 16, 2022.

Kennedy, M. (2022). Mississippi River Barge Movements Restricted Due to Critical Low Water Levels. Progressive Farmer, accessed online at https://www.dtnpf.com/agriculture/web/ag/blogs/market-matters-blog/blog-post/2022/10/03/mississippi-river-barge-movements on November 16, 2022.

Lazard, P.M., and P.L. Kennedy (2020). Trouble at Old River: The Impact of a Mississippi River Avulsion on U.S. Soybean Exports. Journal of Food Distribution Research, 51(3): 1-5.


Author: P. Lynn Kennedy, Ph.D.

Crescent City Tigers Alumni Professor &

Department Head Agricultural Economics & Agribusiness

Louisiana State University and LSU AgCenter


Photo by Justin Wilkens on Unsplash

Kennedy, P. Lynn. “Barge Traffic Restrictions on the Mississippi River and Bulk Agricultural Exports.” Southern Ag Today 2(47.4). November 17, 2022. Permalink