An interesting article recently published by Fabio Mattos, UNL Grain Economist, discussed changes that have happened and are likely to continue in the world’s corn export market as Brazil further develops its corn production. Mattos points out that Brazil now exports 20 million metric tons of maize up from almost no exports 20 years ago. At the same time, Brazil has increased its maize production 4X. A large part of that maize expansion has been in its safrinha or winter crop.
The safrinha crop enters the world export market at the same time that the US corn crop is exported. This pressures US corn prices and is pushing the main corn export period to February-April. Brazilian corn is produced in the country’s center-west and is impacted by poor transportation infrastructure. Mattos calculated Brazilian landed corn costs to Japan as about 15% more than US corn for 2008-2012. Soybean costs to Japan for the same period were nearly equal for Brazil and the US soybeans. Brazilian transportation cost were much higher than US, $41 per metric ton higher. Brazilian transport cost will likely decline as their infrastructure further develops. Mattos also shows that Argentina’s export policies makes its soybeans equal in cost to US soybeans for Japanese importers. If Argentina changes these policy costs, their exports would cost less and possibly undercut US soybeans.
Mattos discusses a recent soybean production area, Matopiba, increases in yield and tillable land and possible new competitive pressures on US grain exports. Matopiba is a region in Northeast Brazil, covering parts of four states, with much closer access to ocean transport thus lower transport cost to Asian Markets.
Take some time to read Fabio Mattos article and think about the implications to US corn and soybean export competitiveness if Brazilian yields increase and transport cost decline. Also think about our own transportation infrastructure, the Mississippi River locks and dams, and how it could effect US grain exports, prices and US farm profitability.
https://agecon.unl.edu/cornhusker-economics/2019/matopiba-international-grain-markets
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