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NAPERVILLE, Illinois, April 2 (Reuters) – The United States was once the world’s breadbasket, commanding the global trade in grains and oilseeds by a wide margin.
The country still leads in corn exports. That title, however, has recently been threatened by Brazil, the same party that demoted U.S. soybean exporters to No. 2.
But U.S. control over global exports of corn, soybeans and wheat is looser than ever.
U.S. President Donald Trump on Wednesday announced sweeping reciprocal tariffs on all trading partners, a risk American farmers accepted when they overwhelmingly supported him in last year's election.
Trade barriers, whether real or perceived, could certainly undermine the relevance of U.S. exports in a space that was previously overwhelmingly controlled.
Rival grain suppliers have increased their yields and export capacities over the decades, sometimes capitalizing on U.S. misfortunes along the way.
EXPORT PARTICIPATION COMMITMENT
On average, over the past five years, the United States has accounted for a record low of 31% of annual global corn exports. Twenty years ago, the U.S. share was 61%, although it peaked at 80% in the late 1970s.
The largest decline was seen between the late 2000s and early 2010s, when the share went from 59% to 35%. This period included the global financial crisis and a prominent series of crop failures in the US.
The second largest corn supplier, Brazil, accounted for just 5% of exports some 20 years ago, although its share is now 22%.
The U.S. share of global soybean exports has fallen significantly, recently reaching a record low average of 27%. This was up from 80% during the 1970s, falling to 50% at the turn of the century.
Brazil became the top supplier of soybeans in 2012-13, and its share has grown. Brazil now accounts for 55% of global soybean exports, up from 39% a decade ago, a period that includes the first U.S. trade war with China, when Beijing reduced its dependence on U.S. grains.
The United States was the largest exporter of wheat until about 10 years ago, and today it is the fourth largest supplier.
But U.S. wheat export dominance peaked in January 1980, when then-President Jimmy Carter canceled, on live television, 17 million metric tons of U.S. grain export contracts with the Soviet Union over the Soviet invasion of Afghanistan.
This became known as the US grain embargo.
At that time, the United States accounted for 44% of global wheat exports. That share is now at a record low of 11%, down from 26% about twenty years ago.
Carter's speech echoed sentiments shared recently by Trump, including a desire to minimize harm to the American farmer and massively increase the volume of agricultural products used domestically.
U.S. intelligence concluded in 1981 that the American embargo was substantially less damaging to Moscow's grain stocks than intended because the Soviets were able to obtain more grain from other suppliers than the Americans expected.
This should sound familiar to the soybean market, as in recent years Brazil has shipped more soybeans than traders and analysts thought possible.
In the early 1980s, the Soviet Union was the largest importer of wheat, accounting for over 20% of annual imports. Today, Russia is the largest exporter of wheat, providing over 20% of annual shipments.
PRODUCTION TRENDS
The United States is the top producer of corn, No. 2 in soybeans and No. 4 in wheat. Similar to exports, recent U.S. production shares are also at historic lows.
The United States accounts for 31% of global corn production, down from 41% about 20 years ago. The country accounted for more than half of global soybean production until about 1990, although the share now stands at 28%.
U.S. wheat accounted for about 15% of global production in 1980, although today it accounts for 6%. Unlike corn and soybeans, the U.S. wheat crop is now generally smaller than it was decades ago.
But Russia has expanded its wheat crop by more than 70% over the past decade, accounting for 11% of global production. That compares with 7% a decade ago.
Brazil has increased its soybean production by about 85% over the past decade and its corn production by about 55%, taking advantage of market opportunities and optimistic profitability. Brazil is now increasing its global soybean and corn production by 39% and 10%, respectively, compared to 30% and 8% a decade ago.
Not all global crops can expand infinitely from here, but the lesson should be clear. Significantly more grain is produced outside the United States than was the case decades ago, and those suppliers may be ready to step in if Washington’s latest move backfires.
Karen Braun is a Reuters market analyst. The views expressed above are hers.
Written by Karen Braun Edited by Matthew Lewis
