In late August, the USDA’s Economic Research Service (ERS) and Foreign Agricultural Service published its 2022 Outlook for U.S. Agricultural Trade, headlined by the speculation that U.S. ag exports in fiscal year 2022 (Oct. 1, 2021, to Sept. 30, 2022) will top this year’s by $4 billion in value – rising to $177.5 billion from $173.5 billion.
This follows on news of the tremendous gain that farm exports are seeing now over FY 2020 – a leap of more than 24 percent, from $139.7 billion last year to a record $173.5 billion through the end of this month. Corn export sales value has more than doubled, from $8.2 billion in 2020 to $18.1 billion this year, and soybean values have jumped 63 percent, from $17.8 billion to $29 billion.
In volume, this represents 54.6 percent more corn shipped than in 2020, from 46.9 million metric tons in FY 2020 up to 72.5 million this year – about 1 billion more bushels – and 20 percent more soybeans, up to 61.5 million tons from almost 49 million last year (a gain of 459.3 million bushels).
“Simply put, agricultural trade is all about opportunities,” said USDA Secretary Tom Vilsack, “for our agricultural producers, our rural communities and the American economy as a whole, as well as for the global customers who value quality, cost-competitive U.S. farm and food products.”
Ed Ebert, Senior Director of Grain Production and Utilization for the Indiana Soybean Alliance and the Indiana Corn Marketing Council, said finding new export markets is a primary function of the state’s corn and soybean checkoffs. He added that Hoosier soybean and corn growers benefit from the many offices that the U.S. Soybean Export Council and the U.S. Grains Council have all over the world, which allows those organizations to establish key relationships with foreign buyers of Indiana farm produce.
Producing and selling crops for export is one thing; being able to move them is equally vital. On Sept. 9, Reuters reported Gulf Coast grain exports were slowly recovering after an enforced hiatus caused by damage and power outages wrought by Hurricane Ida, which crashed into New Orleans on Aug. 29 with winds of 150 mph.
Reuters reported at least three of the region’s terminals owned by CHS, Bunge and Cargill suffered power outages, and noted U.S. barge-loading elevators delayed downriver shipments of grain while hurricane damage was being cleared and power restored. Reuters added that 258,000 tons of corn and soybeans were shipped through key river locks on the Mississippi and its tributaries for the week ending Sept. 4 – down 65 percent from the same week last year, according to USDA data.
Louisiana Ag Commissioner Mike Strain said the U.S. Army Corps of Engineers expected the bulk of shipping channel obstructions on the Lower Mississippi to be removed and dredged by late September.
2022 export expectations
One of the leaders of increased anticipated exports in FY 2022 is again projected to be soybeans, expected to rise by a value of $3.3 billion to a record $32.3 billion, on higher prices the authors wrote will more than offset lower projected export volumes – down from 61.5 million metric tons this year to 55.9 million in 2022 (or down from 2.26 billion bushels to 2.05 billion).
The lower volume of anticipated demand is based in part on the commodity’s higher expected price per bushel, as well as tighter U.S. supplies, increased competition from Brazil and some slowing growth in Chinese demand. Perhaps to nobody’s surprise, half the $4 billion export increase is still forecast to be sold to China in the form of those higher soybean values, as well as cotton and sorghum.
While there are some lockdowns in Chinese cities because of the COVID-19 Delta variant spreading worldwide, the Outlook stated the country’s gross domestic product (GDP) is still expected to grow by 8.1 percent for 2021, slowing to 5.7 percent next year.
U.S. soy meal exports are expected to realize record volume and value in FYI 2021 at $5.9 million, but are forecast slightly down for 2022, at $5.7 billion on lower per-ton value. Soy oil exports, according to the Outlook, are forecast up almost 20 percent to $1 billion for 2022 on higher unit value – this would make up about half the loss the oil saw in 2021 from last year’s export sales.
The report authors noted high premiums for U.S. soy oil have reduced volumes 60 percent year-over-year to the lowest level in 10 years, in FY 2021. At the same time, U.S. grain and feed exports are forecast to be down $1.1 billion in FY 2022, to $41.8 billion, mainly owing to lower corn export volumes making up about $1 billion of that decrease. But this is just on volume – corn bushel value is expected to be higher than this year, while the amount to be shipped in 2022 is forecast to drop to 61 million tons.
U.S. ethanol is projected to see a slight jump in FY 2022 exports, up $200 million to $2.4 billion next year – higher anticipated per-bushel corn prices are expected to buoy ethanol unit values, too, but it is thought that higher volume than in 2021 will also be exported. The Outlook stated the increase is expected to more than make up for 2021’s $60 million loss from last year’s ethanol exports. The report noted gasoline markets continue to recover from less driving taking place during the spread of COVID-19, carrying ethanol with it. There is also continued elevated demand for ethanol in disinfectant use.
China strong, but not alone
In the summer of 2020, U.S. Grains Council (USGC) Senior Director of Global Programs Cary Sifferath saw China start importing large volumes of U.S. corn, as farmers there worked to rebuild their pig herds following large-scale African swine fever culling and to substitute more grain for newly outlawed food and restaurant waste formerly fed to the animals. He said the U.S. sold more than 22.6 million metric tons of corn to China alone in the 2020-21 marketing year (which ended on August 31) and had shipped 21.4 million of that through August 26.
“We have never exported that high an amount of corn to any single-country destination,” he said, explaining China even overtook the U.S.’s perennial champion corn buyer, Mexico. That country imported 14.9 million tons from the U.S. in 2020-21.
Other sizable corn customers for the United States include Japan, Colombia, South Korea and Taiwan.
“We expect feed grain demand, corn and other types, in China to remain strong for the next 2-3 years, for sure. China has already bought 10.74 million metric tons of new-crop corn that will be shipped sometime in the new-crop year,” Sifferath added. “That’s much farther ahead than the same period of time last year with new sales to China.”
Just a few days into the 2021-22 marketing calendar, Mexico had already purchased 3.8 million metric tons of new-crop corn and Japan, 1.37 million. “We’re just starting the new marketing year, but we have some very strong sales already to those three customers on the books.”
Ukraine was once again a strong competitor with the U.S., he noted, exporting 32 million metric tons of corn in the just-ended marketing year. That compared with only 20 million the previous year, owing to a much smaller crop from dry conditions; the USDA also projects higher exports from Russia and India.
In addition, Sifferath said Argentina is set to give the U.S. a run for its money in the new marketing year, while Brazil is facing a much-reduced corn harvest. The University of Illinois’ farmdoc daily noted this summer that Brazil’s safrinha (second-crop) corn harvest could end up being down 16 percent from 2020 on drought and some frost.
“We’re not the only corn-producing nation when it comes to exports, and part of the good fortune we had this year in pricing is that Brazil had a very challenged safrinha,” said Mike Beard, Indiana Corn Marketing Council (ICMC) board director and a corn and soybean grower in Frankfort, Ind. “Their significantly lower production meant that they didn’t have as robust an export opportunity as they would’ve had, had that crop been good.”
He also credited U.S. exports as “the driving force for the increased price in corn and soy” this year, though he wryly noted a number of growers didn’t have full bins to take advantage of selling during the price spike this spring because they had advisors who cautioned them in late 2020 to take advantage of good prices then.
And then demand, particularly by China, rebounded in 2021.
Going forward, Beard said it’s not easy to project China’s future purchases because it is difficult to get information about the country’s own crop production and outside needs. “We need to treat China as a little bit of an unknown, but they do have a recovering pork industry,” he noted. Checkoff-funded marketing efforts the ICMC and the Indiana Soybean Alliance engage in overseas – on their own Cary Sifferath and in partnership with organizations such as the USGC and U.S. Soybean Export Council, as well as with USDA market programs – is critical to maintaining and expanding export destinations for not just corn, soybeans and derived products but also the livestock and poultry fed by them.
Higher farm business income
Earlier this month, the ERS published its forecast on average net cash farm income for U.S. farm businesses in FY 2021. A farm business – which is about half of the country’s farms – is defined as either earning at least $350,000 in gross cash farm income or is a smaller operation in which farming is reported as the operator’s primary occupation.
Average net cash farm income (NCFI) for farm businesses is projected to be up 11.9 percent from 2020, at $93,700, the highest level in five years. By comparison, the gain from 2019 to 2020 was only 6.2 percent – and the rate of increase from 2012 to 2013, a banner year, was just over 10 percent.
Those specializing in hog production are forecast to see the biggest NCFI increase this year, up 70.8 percent – which is also the only anticipated gain for a class of livestock-producing farm businesses. Those specializing in cattle/calves will see an average loss of 7 percent; poultry, 1.2 percent; and dairy, 25.5 percent.
The ERS reported those specializing in corn production will realize an average 57.8 percent increase in NCFI, and soybean specialization isn’t far behind, at 55.5 percent.
