Brazil’s low yields boost projections for U.S. corn exports

Bad weather for corn farmers in Brazil might be good news for U.S. farmers.

The U.S. Department of Agriculture forecasts higher U.S. corn exports for the 12 months beginning Sept. 1 because of reduced yields in Brazil brought on by unfavorable weather since early this year.

Brazil, the second-largest corn exporter following the U.S., has already experienced a decline in corn production by 7.5 million tons and exports by 4 million tons. This drop is expected to continue in the following year.

This has resulted in a better outlook for the U.S., a leading corn producer and exporter in the global market. The country’s corn production is projected to rise by 110 million bushels, and its exports are expected to go up by 100 million bushels because of the reduced competition from Brazil, the USDA report shows. Major corn exporting states such as Missouri, which was ranked eighth in corn exports nationwide in 2014, are expected to increase corn production.

“This is certainly positive news for corn producers in the country,” said Patrick Westhoff, director of Food and Agricultural Policy Research Institute at the University of Missouri. “It’s a significant change in the trade position of Brazil and a significant change in U.S. (corn) exports.”

Still, even with higher export projections, U.S. corn farmers face an uncertain future. Competition from South America continues to grow. Brazil’s corn production, which may recover in a year or two, can also make a difference in the global market.

Projected average corn prices for next year range from $3.10 to $3.70 per bushel, compared with this year’s $3.60 to $3.70 per bushel, the USDA reports.

Westhoff noted that corn prices would remain low at least for the time being because of the strong dollar.

“Increasing exports keep the corn prices from falling more than they have already fallen,” Westhoff said.

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