US share of global grain will continue shrinking: USDA

The share of US exports in the global grain and oilseed trade is set to decrease over the coming decade as a strong dollar and increased competition eat into its traditional markets, a forecast from the USDA said late Thursday.

While the headline figure in its Agricultural Projections to 2027 sees the US increasing its soybean, wheat, and corn exports over the next decade, its once-dominant positions in these markets will continue to decline.

Global trade is set to increase significantly over the coming decade, but the USA will struggle with a strong dollar and growing global competition eat into its market share.

The report, while only released late Thursday, was put together in late 2017 and makes assumptions on the dollar retaining its recent strength and input costs such as fuel and fertilisers remaining low.

Nonetheless, there was some solace for US exporters, as the USDA explained it “remains competitive in global agricultural markets, in part due to efficiencies and quality.”

As such, exporters can expect net cash income and net farm income to start to rise again over the coming decade, having shrunk in recent years.

Soybeans

With Chinese demand driving soybean growth, the USDA sees global trade growing more than any other crop over the coming decade.

“Increasing global demand and rising domestic use for soybeans is expected to cause prices to rise and generate higher producer returns, producing incentives to increase plantings,” the USDA said.

While China’s proportion of global trade is set to fall, demand is still forecast to grow 47% by 2026/27 – taking it to 143 million mt of imports a year.

Export volumes from the US and Brazil are both set to grow to meet Chinese over the coming decade, although a gulf is set to grow between the two.

While soybean exports are currently comparable, the US will grow at 12% to 68.4 million mt while Brazil will grow 48% to 96.4 million mt and cement its title as world’s biggest exporter.

Argentinian exports over the same period are forecast to grow 76% to 14.1 million mt.

Corn

The global corn trade is set to expand 25% over the coming 10 years, growing to 188.8 million mt as growing feed demand from an expanding meat industry drives consumption.

Brazil and Ukraine are set to be the big winners, with Brazil growing 32% to 44.8 million mt and Ukraine up 49% to 30.5 million mt.

US exports will grow 14% over the same period, but will lose 8% market share despite remaining the world’s biggest exporter with 55.9 million mt.

Mexico is set to be the biggest buyer by a long way, increasing its import volumes 42% by 2027 as it buys 23.5 million mt.

Japan, currently the world’s biggest buyer, is set to remain essentially static over the course of the decade around 15 million mt, while Iran pushes on 44% to 14.4 million mt.

China will return to the world market over the coming decade, having drawn down its massive stockpiles, with imports set to increase one-and-a-half times to 7.5 million mt.

Wheat

The global wheat trade is forecast to grow at a more modest 17% over the course of the coming decade, but with a more diverse and distributed spread of importers and growing number of exporting states, new trade routes are likely to emerge.

And trade volumes are set to remain the biggest of the three bulk crops – at 212.1 million mt, compared to corn’s 188.8 million mt, and soybeans’ 204.8 million mt.

Per capita consumption is not set to expand significantly, but “population growth, limitations to expansion of domestic wheat production, and increasing wheat feed demand” will all contribute to the growing trade.

Sub-Saharan Africa looks set to the big growth market, with 47% growth forecast to 19.1 million mt, while the Middle East is set to grow 27%.

Egypt, which was recently displaced by Indonesia as the world’s biggest wheat buyer, should be back at the top by the end of the current marketing year and expand consumption 22% over the course of the coming decade.

On the export front, the EU is set to become the biggest seller over the course of the decade – increasing 45% to 39.7 million mt.

At the same time, Russia will gain 3% to 33.9 million mt, while the US’ declining role in the global wheat trade is set to continue as it grows just 1% to 27.5 million mt.

Canada, Argentina, Australia, and Ukraine are all set to have double-digit growth, while Turkey and Kazakhstan will also emerge as bit-part players on the global export market.