Grain Bins


Demand for US Corn increases across the globe

Posted on May 12, 2021
Exports blog graphic v1

Just one year ago it seemed that no matter where we turned the news was full of uncertainty, especially as store shelves sat empty and meat processing plants across the Midwest slowed to a crawl. There was a general panic among many farmers, as well as consumers, about what was going to happen with food and grain supplies at home and abroad.

Still, no one knows what will happen for sure, but If you’ve been following the news lately you know grains are hot. Commodity prices are rising, and exports are hitting record highs. Just two weeks ago the prices of corn, soybeans and wheat had reached their highest level since 2013.

As demand continues to soar, here are some of the factors fueling the world’s need:

Corn rally:

As we’ve seen over the past several weeks, grain markets have exploded, especially when it comes to corn, which has risen more than 30% this year alone. Garrett Toay of AgTrader Talk points to multiple factors in the recent rally.

“Demand is a combination of multiple things. There is some inflationary buying, multi-year lows caused by the pandemic combined with historical lows over the past 18 months. We also had a smaller 2019 corn crop and that really led to compounding the issue.”

Don’t expect the prices to fall too soon or too quickly. He says we should expect them to stay around for a while.

“We should have a couple of years of higher prices as the market is rallying trying to ensure the U.S. farmer plants every acre of corn they can. At the same time, we’re trying to encourage farmers to plant as many bean acres as possible. We do have a drought in South America and Brazil and if that continues, then that will only tighten the new crop supply and make it so we need more corn acres.”

Foreign demand:

One of the driving factors behind the corn rally is foreign demand. With the South American drought, especially in Brazil, less-than-adequate weather in Argentina and China racing to replace their feedstocks, Toay suggests there’s a good possibility that we might hit the record $8.24 per bushel.

“The question two or three months ago was, we know China needs to buy some corn,” says Toay. “Is this a one-off or one-year deal? Is it a multiple-year deal, or is it like the mid-2000s when China emerged in the soybean market and became a global player?

“At this point, over the past few weeks we’ve seen inspections and shipments to China accelerating, so they are taking what they have bought, yet it also looks like they’re buying new crop. A portion of the unshipped old crop sales will get rolled into new crop.”

He said we should expect China to be a major player for at least two more years when it comes to their consumption of U.S. corn. Beyond that, it’s too early to tell what they will do in the future.

China's Demand for US Corn since 2015/16
Data from the US Grains Council demonstrates the nearly exponential growth in Chinese demand for U.S. corn since the 2018/19 marketing year. It has grown by over 8 times the demand of the previous year.

Scott Irwin, the Laurence J. Norton Chair of Agricultural Marketing at the University of Illinois, suggests that some of the demand from China comes from policy decisions made within both countries.

“As the global economy recovers from the pandemic, it’s expected there’s going to be an increasing demand for food and meat in particular,” said Irwin. “China has made more effort than many have expected to fulfill the Phase 1 trade agreement provisions put in place by former President Trump.”

Toay and Irwin both agree that beyond China, South America has a strong impact on foreign demand and dependence on U.S. grains. Brazil is the second-largest exporter of corn in the world, and with their recent weather-woes, it opens the market for more U.S. corn to be sold and exported across the globe.

“South America has expanded their corn acreage as expected, but they didn’t end up getting stellar weather,” said Irwin. “So, on the supply side, from the U.S. perspective, we’re certainly getting help price-wise from some weather problems in Argentina, but here late in the growing season in Brazil for their second corn crop, a significant part of it is under extreme drought.”

May is World Trade Month:

In recognizing the demand for commodities across the world, it’s also worthwhile to take a moment and mention that May is World Trade Month.

Started in 1927 as ‘Trade Week’ by the Los Angeles Chamber of Commerce, the event has been celebrated during the month of May since 1935. This is an opportunity to recognize the importance of exports to the U.S. economy and our agriculture industry right here in South Dakota.

Here are some facts on world exports and trade:

  • U.S. exports of goods and services totaled $3.13 trillion in 2020.

  • The World Trade Organization estimates a 7.2% improvement in international trade in 2021 after seeing a decline in 2020.

  • About 25% of U.S. farm products by value are exported each year and 14.1% of U.S. beef is exported.

  • In South Dakota, one in four bushels of feed-use corn is exported via beef or pork.

  • According to USMEF, the projected market value of red meat exports to South Dakota corn from 2020-2029 is expected to reach $944 million.

  • 2.55 billion bushels of U.S. corn are projected to have been exported in 2020 according to USDA.

  • The top 5 destinations for U.S. corn in 2020 were Mexico, Japan, Colombia, South Korea and China.

Continuing to build global demand:

Demand for commodities across the world will continue, especially as the global population continues to grow. SD Corn partners with organizations such as the US Grains Council and US Meat Export Federation to continue developing new and growing export markets.

As we continue to talk about commodities and their impact on global trade and exports, be sure to catch our latest Farming in the 605 podcast episode featuring Ryan LeGrand, president and CEO of the U.S. Grains Council. Each week, our host Mike Pearson sits down with different agriculture industry leaders and newsmakers to bring farmers in South Dakota the conversations on topics that impact our industry.

News Categories

Stay Up-to-date

Subscribe to receive information that impacts South Dakota farmers.

By submitting this form, you agree to South Dakota Corn's privacy policy.

More News