Corn Across the Globe – international production and trade of corn
The world currently produces and consumes over 780,000 thousand metric tons TMT of corn, but it’s not as simple as that. Countries around the globe enter the market as buyers and sellers in order to secure domestic demand and unload excess supply. International trends in production, consumption, imports and exports all affect trading prices of corn. Understanding these trends is an important step in becoming a corn trader.
The U.S. is the largest producer of corn in the world. Other major producers in the world are Brazil, Mexico, and the European Union. In 2007/08, U.S. domestic corn production accounted for 331,177 (TMT). China is the next largest producer of corn, at less than half that that seen in the U.S. Their 2007/08 harvest yielded 152,300 TMT. Factors, like weather conditions for example, affecting these regions’ ability to produce corn have an influence on the trading prices of corn.
The majority of the largest producers of corn are also the largest consumers. The correlation is due large in part to global livestock production. Corn is an essential part of feed used in the production of livestock and regions that grow corn are large producers of beef, pork and poultry. Livestock feed accounts for approximately 60% of global corn production, and that’s why the largest producers of livestock are mostly the largest producers and consumers of corn. Livestock demand and the feed requirements needed to meet the demand have a significant effect on the trading prices of corn.
The U.S. is the largest exporter of corn accounting for 60,757 TMT of the world’s 96,027 TMT exports in 2007/08. Argentina and Brazil round out the top three exporters of corn. Total corn exports are expected to decline by over 18,000 TMT between 2007/08 and 2008/2009 harvest years. 15,000 TMT of the decline can be solely attributed to declines in U.S. exports. Some possible fundamentals that are driving factors of declines in exports include lower crop production, increased domestic demand, and replenishment of strategic reserves.
On the other side of the trade, Japan and Mexico are two of the world’s largest importers of corn, for very different reasons. Japan does not produce any corn relying solely on corn imports for domestic supply. Mexico on the other hand is a large producer of corn, but demand outweighs production because the corn tortilla is the main staple food for Mexicans. It’s important to keep an eye on the factors affecting difference between supply and demand for large importers and exporters of wheat, because these are the major players in the foreign market affecting trading prices.
(Exports/Imports figures from USDA FAS PSD online World Corn Trade chart)
(Production/consumption figures from USDA FAS PSD online World Corn Production, Consumption and Stocks charts)
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