US corn has lacked competitiveness so far in 2022-23, but has found steady demand in Mexico. The origin could struggle in 2023-24 in the face of reduced Chinese demand, particularly if weather conditions do not improve in the US corn belt.
Deteriorated export prospects to China
Dry conditions in the US corn belt could leave final output well below previous expectations if sufficient rainfall fails to materialise in the coming weeks, which would in turn constrain the origin's export prospects in 2023-24 and reduce its ability to compete with ample supplies in Brazil in the first part of the marketing year.
For the remainder of 2022-23, US corn exports in May-August could stand at 16.3mn t, assuming the US exports 37pc of its crop in those months, in line with the 10-year average. But China, one of the major recipients of US corn in the past few years, is due to import less corn than previously expected for the rest of 2022-23 and in 2023-24 largely because of increased feed wheat production domestically. Much of the remaining demand is likely to be picked up by Brazil because of the country's record corn crop and competitive prices.
That said, the US may have a short window of opportunity as Brazil struggles with logistics, with corn competing with soybeans and other commodities for internal shipping capacity to ports. The 2022-23 soybean exports are also still ongoing and are for now taking up much of the country's export capacity.
But Brazil's logistical constraints may not be enough to make substantial room for US corn exports to China. In 2022-23, before Brazil's record crop had hit the market, China had already cancelled over 1.5mn t of previously booked volumes, with over half a million tonnes cancelled in the week ending 8 June.
Mexico offers some hope
In contrast to China's reduced purchases, Mexico's receipts for US corn have been steady on the year and imports for 2023-24 are due to increase to 18mn t, from 17.2mn t estimated for 2022-23, according to the US Department of Agriculture's Foreign Agricultural Service (USDA FAS).
Mexico partially lifted its ban on genetically modified (GM) corn earlier this year, which helped preserve the trade flow, but still bans its use for human consumption.
That said, if Brazilian corn widens its discount to US corn sufficiently in the coming months, it could gain market share in traditional US importing destinations.
