United States To Remain Largest Grain Exporter In Americas

Business Monitor International (BMI) believes that the United States will remain the largest grain exporter in the Americas (and thus the world) over the long term, despite news that Brazil is expected to replace the US as the world’s top corn and soybean exporter. (See chart below, click to enlarge.)

Selected Countries - Net Grain Exports ('000 tonnes). Note: FSU-12 = former Soviet Union 12; EU refers to member states prior to joining; Grain exports include wheat, corn & soybean; 2012/13 is a forecast; Source: BMI, US Department of Agriculture.

Aside from higher US grain exports due to improvements in production (owing to better weather), our belief stems from three key reasons:

  • Even with significant demand destruction (partly due to the closure of ethanol plants), grain prices remain elevated by historical standards, encouraging US farmers to plant more.
  • US farms are displaying relatively healthy financial statements despite poor crops in the last two seasons. In particular, farm net income from the 2013 season is forecast to come in at 40-year highs (in constant 2005 US dollars), and relative debt levels at US farms are at 50-year lows, allowing for increased capital expenditure (particularly for seeds and farm equipment) and a greater planted area.
  • Although South America will catch up with the US in terms of efficiency, the US will have the more efficient grain sector over the long term (leading to higher yields and superior ability to mitigate lower average grain prices).

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