WILCOX, NEBRASKA, U.S. – With the 2019 U.S. corn crop harvest underway, the American Corn Growers Foundation (ACGF) warns of current and longer lasting issues impacting the industry.
“As farmers harvest our 2019 corn crop, we need to be aware that as of Oct. 17 accumulated U.S. corn exports (quantities shipped) were only 37% of year-ago levels. Apparently, today’s new policymakers have yet to learn the hard lesson that trade wars are not easy to win. In fact, trade wars come with a tremendous cost to farmers and the rural economy,” said Gale Lush, ACGF chairman.
“China is not rushing to sign a new trade deal with the U.S. Bloomberg News reported on Oct. 24 that China aims to buy at least $20 billion in U.S. farm goods in a year if a partial deal is completed,” Lush said. “$20 billion is less than what China bought from us before Trump’s trade war. He said it’s the ‘best trade deal ever’. It will take us years to regain the exports he lost. I don’t call this winning. U.S. consumers also pay the trade war’s import tariffs. The only winning some corn farmers might do this year is if they are lucky enough to have a good crop while bad weather in other regions reduces the national corn crop and raises prices.”
On the subject of trade issues, Lush also said the U.S. made a mistake withdrawing from the Transpacific Partnership (TPP) in 2017. TPP included the U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
“We were still part of that trade agreement in 2016,” Lush said. “It would have put us in a stronger, competitive position to access those import markets and compete with Canada and Australia for grain exports to Japan, a key import market. As of Oct. 17, 2019, U.S. accumulated corn exports to Japan are only 605,000 tonnes compared to 1.574 million tonnes at the same time one year ago. Outstanding U.S. corn export sales to Japan are only 924,900 tonnes compared to 1.750 million tonnes last year at this time. The U.S. is again getting put in the position of being a residual export supplier to world markets. That is not ‘winner’ status for U.S. farmers.”
According to Dan McGuire, ACGF policy director, the Oct. 17 USDA Export Sales report showed more than just lagging corn exports.
“That same report showed that outstanding or yet-to-be-shipped corn export sales were only 60% of year-ago levels (12,947,100 tonnes last year at this same time vs. 7,729,200 tonnes this year),” McGuire said. “Taken together, lower accumulated corn export quantities combined with lower outstanding corn export sales quantities as of Oct. 17, compared to year-ago levels, show that corn exports are running about 417 million bushels behind last year and that’s a big negative factor hanging over corn prices.”
McGuire referenced the Oct. 12 USDA World Agricultural Supply Demand Estimate (WASDE) noting it projected 2019-20 marketing year corn exports to reach only 1.9 billion bushels, down from 2.065 billion bushels in 2018-19 and 538 million bushels less than the 2.438 billion bushels reached in 2017-18.
McGuire said using 2017-18 as a reference corn export year and combining the 373 million bushels of lower exports from 2017-18 to 2018-19 with the 538 million bushel less quantity projected in 2019-20, it’s an export loss of 911 million bushels over those two years. The USDA WASDE same Oct. 12 report projects corn use for ethanol to reach only 5.4 billion bushels, 205 million bushels less than in 2017-18.
“2018-19 corn use for ethanol was 229 million bushels less than 2017-18, McGuire said. “Using 2017-18 as a reference year, reduced exports combined with lower corn use for ethanol in 2019-20 equals over 1 billion bushels less cumulative corn demand resulting in over 1.9 billion bushels of projected corn ending stocks (year-end inventory) and projected average farm prices for corn of only $3.80 per bushel.”
McGuire along with the ACGF would like the U.S. government to encourage the use of corn in U.S. ethanol to balance the strain U.S. farmers are feeling from ongoing trade issues.
“It’s well past time that the administration in Washington, D.C. enact policies to dramatically increase the amount of corn used for ethanol right here in the domestic U.S. market,” McGuire said. “The same decision makers that enacted the trade policies and trade wars that caused U.S. farmers to lose export markets have used ethanol blending waivers to reduce corn used in ethanol. They are obligated to quickly take the necessary steps that will greatly increase annual corn use for ethanol by at least 1 billion bushels, and that’s just playing catch up.
“Corn export and ethanol use and demand are headed in absolutely the wrong direction. Increasing corn demand in the domestic U.S. ethanol market via the Renewable Fuels Standard (RFS) should be a no-brainer for policy makers if they’re actually serious about increasing corn demand and corn prices to increase farm income in support of the rural economy,” McGuire said.
Founded in 1987, The American Corn Growers Foundation carries out programs of public education, promotion and advocacy on behalf of renewable energy, including ethanol and wind energy, for purposes of rural economic development and national energy security and independence. The foundation is an independent entity and is not affiliated with any political party, business, association or foundation.