TOKYO — U.S. corn prices have slipped to their lowest levels in almost three years as China ramps up imports from Brazil, cutting into demand for American exports ahead of an expected bumper crop.
Benchmark Chicago corn futures sank below $5 a bushel in late August and have remained down since. On Sept. 19, they dipped under $4.70 to the lowest since December 2020.
This comes amid a drop in purchases by China, the world’s largest consumer of corn.
China’s imports of U.S.-grown corn came to about 240,000 tonnes in August, down from nearly 1.5 million tonnes a year earlier, according to estimates from Refinitiv based on maritime shipping data. Meanwhile, its imports of Brazilian corn swelled from zero to around 580,000 tonnes. The gap widened in September to roughly 1.22 million tonnes from Brazil, versus about 70,000 tonnes from the U.S., as of Thursday.
The shift owes partly to a strong harvest that has made Brazil’s corn more price-competitive. On top of this, “China’s moves to diversify its sources of imported corn to improve food security have had an impact,” said Ruan Wei of Japan’s Norinchukin Research Institute.
China had relied almost entirely on American and Ukrainian corn, but this began to change in late 2022 as friction with the U.S. and Russia’s war in Ukraine spurred China to steer away from both.
An analysis by the U.S. Department of Agriculture using the Herfindahl-Hirschman Index, a measure of market concentration, found that competition in China’s import market increased 22% in the 2022-23 year compared with a year earlier amid an increase in purchases from Brazil.
The American share of China’s corn market is following a similar decline seen in soybeans roughly a decade ago. Brazil’s soybean production swelled in response to growing Chinese demand, and the South American nation overtook the U.S. to become China’s leading supplier.
“The market share of U.S.-grown corn will continue to fall going forward,” Wei said.
U.S. corn production for the 2023-24 year is forecast to be the second-highest on record, according to the USDA, which, combined with weaker export demand, will slacken the supply-demand balance.
With Brazilian exports of second-crop corn approaching their peak in the Southern Hemisphere growing season, some market watchers see relief for American growers ahead. “Brazil’s export offensive will ease later on, making it easier for buyers to choose U.S.-grown” corn, said Naoyuki Omoto of Tokyo-based grain consultancy Green County.