Written by Krista Swanson
Trade of agricultural commodities has increased significantly over the last twenty-five years. Supportive foreign and domestic policies have allowed the United States access to new markets. And increasing populations and rising incomes in emerging economies across the world have boosted demand. This is important, given domestic demand has not kept pace with increasing productivity on U.S. farms.
Expanding agriculture export demand has been critical in sustaining prices and revenues for U.S. farmers. U.S. agriculture exports have more than tripled in value from $62.8 billion in 1997 to $196 billion in 2022. On average, exports have made up two-thirds of the value of food grain production over the past three marketing years. In the same time frame, exports have accounted for over half the value of oilseeds production and approximately one-third of the value of production for meat products.
There is general consistency in trade flows of agriculture commodities, but numerous factors can result in changes to trade flows at any time. Changing domestic and foreign policy, geopolitical relations, disease, production shifts at home and abroad, and natural disasters are factors that have impacted trade patterns in recent years. With focus on Midwest agriculture commodities and exports in the short-term, let’s dive into three key nations of importance: China, Brazil, and Ukraine.
China
Over the past two marketing years, China received over half of total U.S. soybeans exported, more than a quarter of U.S. corn exports, and 20 to 25% of U.S. pork exports. In November 2022, the first-ever shipment of Brazilian corn was exported to China. Already positioned as a strong supplier in the world market for soybeans, new access to China empowers Brazil as a more significant competitor in the global corn market as well. Access to a new supplier will influence China’s corn purchase patterns. And emerging reports that a new surge in African swine fever infections in China is expected to reduce hog output later this year could also impact China’s demand for corn and soybeans.
Brazil
Brazil has grown from a relatively minor corn exporter to a major world market supplier over the last fifteen years. From suppling just 7.9% of world corn exports in the 2008/09 marketing year, Brazil is expected to supply over a quarter of world corn exports in the 2022/23 marketing year. In comparison, the U.S. market share has declined from supplying 62.8% of world corn exports in 2008/09 to an expected one-quarter of world corn exports for 2022/23. Notably, Brazil is likely to surpass the U.S as the largest corn exporter this year or next. Though production has also increased in Brazil, exports have grown as a faster pace by expanding into new markets, such as the recent deal with China. Brazil has been a significant soybean exporter for many years, supplying nearly one-third of global soybean exports in 2008/09. Consistently increasing market share over time, Brazil is expected to supply more than half of the world’s soybeans for 2022/23. Brazil’s expanding production area and market share enhances the need for U.S. growth in new and existing demand sources.
Ukraine
Russia invaded Ukraine in February 2022. In the three marketing years prior to the war, Ukraine supplied 15% of world corn and 10% of world wheat trade ranking as the world’s fourth largest corn exporting country fifth largest wheat exporting 
country. Aside from damages to ports and grain storage facilities, farmland has also been impacted. Estimates indicate one-third of Ukraine farmland is contaminated with land mines. Removing mines is time consuming and risky, but not removing is also risky. Aside from human risk, mine explosions can cause lasting damage to land structure. In 2022, Ukraine harvested 53.1 million metric tons (MMT) of grain, primarily corn, wheat, and barley. Ukraine’s grain harvest is likely to fall further in 2023, with harvested grain forecast at 44.3 MMT, just over half of the pre-war record 86 MMT production in 2021. When the war began, Ukraine’s vital food and fertilizer exports halted. As part of the Black Sea Grain Initiative brokered in July 2022, Russia permitted Ukrainian exports from certain ports. Renewal of the agreement pushes expiration to May 18, 2023, notably before Ukraine’s summer wheat harvest when an influx of grain will be available. Already burdened by war impacts, Ukraine’s ability to export the new crop hinges on another extension of the agreement.
Here in the midst of Midwest planting season, we anticipate final planted acres and growing season weather. Meanwhile, the demand needs and buying patterns of China, production and exports in Brazil, and continued war impacts in Ukraine collectively have major impact on the global markets for Midwest grown agriculture commodities.
Sources:
https://www.ers.usda.gov/topics/international-markets-u-s-trade/u-s-agricultural-trade/u-s-agricultural-trade-at-a-glance/
https://www.reuters.com/world/china/chinas-pig-farms-battle-new-surge-african-swine-fever-2023-03-15/
https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/agriculture/112422-first-ever-shipment-of-brazilian-corn-to-china-underway-more-expected-in-coming-days
Krista Swanson is a consultant and speaker for her business AgSCOPE, and a research analyst for the Department of Agriculture & Consumer Economics at the University of Illinois where her work is frequently published in articles on farmdoc. Krista and her husband actively farm with his family where they raise corn, soybeans, and four kids on the farm.
Disclaimer: The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the views, opinions or positions of FCS Financial.
