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US Grain Exports Face Downward Revisions as Prices and Competition Shift

The USDA revising its forecast for corn and wheat exports downward, reflecting the broader landscape of shifting prices and global competition.

In a report published on Wednesday, the agency forecasts US grain and feed exports to reach $37.6 billion in fiscal year (FY) 2024, a $600 million decline from the February forecast. This downward revision is primarily attributed to lower prices for corn and wheat.

Corn Exports: Lower Prices Dampen Projections

Despite strong demand from key regions like Canada, India, the UK, and Colombia, the USDA has lowered its forecast for corn exports to $12.4 billion, a $600 million reduction from the February prediction. This decline is largely due to lower unit values caused by a softening of global prices.

“Global prices continue to trend lower, though there remains some uncertainty surrounding South American production and Northern Hemisphere crop concerns primarily in the United States and Black Sea region,” the report explains.

Wheat Exports: Competition and Lower Prices Weigh on Outlook

The outlook for US wheat exports appears even more challenging. The USDA has downgraded its wheat export forecast to $5.8 billion, representing a $100 million reduction from the February projection, due to a combination of lower unit values and slightly lower volumes. This decline is driven by fierce competition from Black Sea suppliers and the anticipation of a larger US wheat crop in the 2024/2025 marketing year, which is expected to exert downward pressure on prices.

“Until recently, global wheat prices had been trending lower due to stiff ongoing competition from Black Sea suppliers," the report states. "Additionally, an expected larger U.S. crop in 2024/25 is anticipated to weigh on U.S. export prices.”

Biofuel Demand Fuels Ethanol Exports

The report also highlights the growing demand for US ethanol exports, primarily driven by the biofuel industry. Canada remains the top destination for US ethanol, with higher ethanol-gasoline blending in Ontario and Quebec. India's push for higher fuel ethanol blending and border protection for fuel-quality ethanol also presents a potential opportunity for increased US ethanol exports.

“Canada remains the top destination by a wide margin supported by higher ethanol-gasoline blending in Ontario and Quebec,” the report notes. “India’s push to higher fuel ethanol blending and border protection for fuel-quality ethanol create opportunity to backfill demand in the industrial chemical market.”