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U.S. Exports of Feed Grains in All Forms Set Record

A positive surprise after a year of trade tensions

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Global Connection

For the second year in a row, the United States set a new record for exports of feed grains and co-products in 2017/2018 (Sept. 2017-Aug. 2018), led by higher corn and ethanol shipments, according to data from the U.S. Department of Agriculture (USDA) and analysis by the U.S. Grains Council (USGC). The top five markets for these exports exemplify a marketing year characterized by both opportunities and challenges.

Overall, the U.S. increased exports 6% year-over-year to nearly 120 million metric tons of feed grains in all forms (GIAF) in 2017/2018, translating into roughly 4.75 billion bushels, or a third of U.S. production.

Growth Witnessed Across Commodities

The commodities promoted by the Council internationally generally had encouraging year-end results.
Corn represented the bulk of GIAF exports in 2017/2018 at 61.8 million tons (2.43 billion bushels), representing the most corn sold since 2007/2008. Eighty countries purchased U.S. corn, with 11 markets purchasing more than one million tons.

U.S. ethanol exports surged 19% to a record 1.62 billion gallons (equivalent to 547 million bushels of corn). Notably, U.S. ethanol exports are up 60% over the last two marketing years, with back-to-back years of record exports.

Each of the top four buyers of U.S. DDGS — Mexico, South Korea, Turkey, and Vietnam — purchased more than a million tons, indicating continued strong global interest in the feed ingredient. Overall, U.S. DDGS exports grew 5.7% year-over-year to 11.7 million tons sold, thanks to a vigorous U.S. response to disruptions in the Chinese market, resulting in the rise of other market players.

The U.S. also increased sales of corn gluten feed/meal 11.3% year-over-year to 2.03 million tons. U.S. barley exports remained roughly unchanged over the last three marketing years with nearly 550,000 tons (25.3 million bushels) sold.

Rounding out the major commodities and co-products, sorghum exports were down year-over-year at 5.16 million tons (203 million bushels), but several smaller markets did increase purchases, including Japan, South Korea, and Spain.

Mexico Dominates GIAF Imports

Mexico topped all other markets in GIAF imports, with shipments growing year-over-year to a new record of 25.2 million tons (almost 1 billion bushels in corn equivalent). This year’s sales continue strong export growth seen over the last five marketing years despite uncertainty surrounding the negotiation of the U.S.-Mexico-Canada Agreement (USMCA).

Corn exports to Mexico reached a new record high for the fourth year in a row at 15.7 million tons (618 million bushels). Mexican purchases of U.S. DDGS also set another new record at 2.13 million tons — a 52-fold increase since NAFTA went into effect in 1994.

And, as the top barley buyer, Mexico continued to dominate U.S. barley sales in at 394,000 tons (18.1 million bushels), a 9.7% increase year-over-year.

Notably, Mexico expanded the ethanol blending allowance from E5.8 to E10 in 2017, providing a crucial step for long-term policy and market development. Showing early signs of potential, Mexican purchases of U.S. ethanol increased 12.8% year-over-year to 31.1 million gallons (11 million bushels in corn equivalent).

While Mexico remains a key market for U.S. sorghum, purchases dropped substantially, falling to 67,000 tons (2.64 million bushels), compared to 568,000 tons (22.4 million bushels) the year prior.

Japan Remains Steady Buyer

The Council has worked in Japan since 1961, and the country remains one of the largest and most loyal U.S. markets. Japan represented the second largest overall GIAF market overseas in 2017/2018 with shipments roughly unchanged from last year at 16.9 million tons (665 million bushels). Purchases of U.S. corn stayed steady at 13.2 million tons (520 million bushels), while Japan set a new record for U.S. DDGS imports, increasing year-over-year to 463,000 tons.

Japan also ranked as the second largest buyer of U.S. sorghum, increasing purchases by 85.8% to 337,000 tons (13.3 million bushels), and as the third largest buyer of U.S. barley with increased imports to 37,500 tons (1.72 million bushels).

New in 2018, Japan will now allow U.S. ethanol to be used as a feedstock for ethyl tertiary-butyl ether (ETBE), a component of gasoline used in that country as an oxygenate, providing additional demand in coming years. Japan more than doubled U.S. ethanol imports to 934,000 gallons (331,000 bushels in corn equivalent), the most since 2010/2011.

For the Japanese market to stay large and loyal, U.S. farmers and agribusinesses must continue to invest in the informational exchange between industries and provide assurances the U.S. is committed to these partnerships for decades to come as the two countries discuss trade terms.

South Korea Sets New Import Record

South Korea set a new record as the third largest buyer of U.S. feed grains and co-products in 2017/2018 with increased purchases of 9.33 million tons (367 million bushels). The trade agreement partner ranked as the second largest buyer of U.S. DDGS, the third largest buyer of U.S. corn and sixth largest buyer of U.S. ethanol in addition to significant sales of U.S. sorghum.

For the last 15 years, South Korea has steadily increased imports of U.S. DDGS. This past marketing year, South Korea purchased 1.18 million tons, officially exceeding the one-million-ton mark for the first time and representing a 22.3% increase year-over-year.

South Korea also increased purchases of U.S. corn slightly to 5.74 million tons (226 million bushels) — the highest amount since the U.S.-Korea Free Trade Agreement (KORUS) went into effect seven years ago. South Korea also set a new record for U.S. sorghum purchases at 59,800 tons (2.35 million bushels) and increased buying of U.S. barley to 7,290 tons (335,000 bushels).

South Korea currently uses roughly 140 million gallons of ethanol each year, but only for beverage and industrial uses. Despite this restriction, South Korean imports of U.S. ethanol set a new record in 2017/2018, jumping 47.3% to 69.7 million gallons (24.7 million bushels in corn equivalent).

Canadian Purchasing Hits New High

Canada set a new record for GIAF imports in 2017/2018 as the fourth largest overall market, increasing purchases year-over-year by 13.4% to 7.33 million tons (289 million bushels).
Many alternative energy and protein feed ingredients are available for Canadian livestock producers, so import levels of individual feed ingredients can vary year-to-year depending on local crops and prices.

Canada purchased more than one million tons of U.S. corn for the first time since 2014/2015, with a substantial year-over-year increase to 1.63 million tons (64.2 million bushels).

Additionally, Canada increased imports of U.S. corn gluten feed/meal to 74,100 tons.

In contrast, imports of U.S. DDGS declined year-over-year to 654,000 tons, and purchases of U.S. barley also declined to 87,100 tons (4 million bushels). While representing a year-over-year decrease, these sales represent a 44-fold increase and a 114% increase, respectively, since NAFTA entered into force.

Ethanol, however, remains the largest growth opportunity. Canada currently imports close to 20% of domestic fuel ethanol, nearly all of it from the U.S. Canada ranked as the second largest buyer of U.S. ethanol in 2017/2018 with imports increasing slightly to 337 million gallons (119 million bushels in corn equivalent), a 175-fold increase since NAFTA was implemented.

The Canadian government is developing a national Clean Fuel Standard (CFS) with individual provinces already declaring an interest in moving to E10 to achieve carbon intensity reductions. The policy is set to take effect in 2021, but multiple provinces across Canada have already started the transition to E10, including Ontario, which will do so in 2019.

Chinese Market Declines

Continuing a steady decline in overall purchasing since 2014/2015, Chinese GIAF purchasing decreased by 17.8% in 2017/2018 to 6.86 million tons (270 million bushels) while still ranking as the fifth largest overall GIAF market.

China remained the top buyer of U.S. sorghum at 4.2 million tons (165 million bushels) and more than doubled purchases of U.S. ethanol to 99.8 million gallons (35.4 million bushels in corn equivalent), with the bulk of both commodities purchased before new tariffs were enacted that sharply limit imports.

Feed grain producers continue to see their yields and overall production rise amidst challenging trade policy conditions. The trade policy challenges of the last year denote the necessity of policy engagement and market development work to keep sales robust. ■

Michael Dwyer serves as the chief economist for the U.S. Grains Council, a non-profit organization that promotes the use of U.S. barley, corn, sorghum and related products including ethanol and distiller’s dried grains with solubles.

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