Australia is currently forecast to export 1.4 million tons of sorghum in the 2020/21 marketing year (Mar 2021 – Feb 2022) on production of 1.5 million tons, a 93 percent exports-to-production ratio. In the past, Australian sorghum used to be exported to a wide range of destinations; however, ever since China entered the sorghum market in earnest in 2013/14, most Australia sorghum exports have been destined for China. Despite the ongoing trade dispute between the two countries that has halted the flow of Australian barley to China, bilateral sorghum trade remains strong.
Argentina is experiencing a similar sorghum boom. After several years of sorghum exports below 1.0 million tons, exports in the 2020/21 marketing year (also Mar 2021 – Feb 2022) have shot up and are now forecast to more than triple from the prior year to just over 2.2 million tons. As the world’s largest sorghum importer, China is also the primary destination for Argentina sorghum this year.
Despite the strong performances of both Australia and Argentina, the United States remains the world’s top exporter of sorghum and is the top supplier to China. However, with U.S. prices higher than its competitors, China is diversifying its suppliers. If 2020/21 is any indication, if China is willing to buy, Australia and Argentina are ready to sell. In 2021/22 (Oct-Sep), China is forecast to import a record 10.3 million tons of sorghum.
Canadian Corn Imports Robust
Canada corn imports are forecast at 3.3 million tons, up 10 percent from last month. If realized, it would be the largest level of imports since 2002/03. Imports have been robust for the first 2 months (Oct-Nov) of 2021/22, nearly quadrupling the volume from a year ago. Imports for Saskatchewan and Alberta already exceed the volume imported during all of last year. Moreover, the U.S. Export Sales Report shows outstanding sales of 2.2 million tons at the end of December, suggesting large imports ahead.
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The pace of U.S. corn sales and strong imports are indicative of the feed grain situation in western provinces where the cattle inventory is concentrated. Summer drought sharply reduced supplies of barley, oats, and wheat, with barley being the primary feed grain in the region. Since last summer, prices of feed barley in Alberta have trended up and averaged CDN $439 per ton during December compared to CDN $274 a year earlier, suggesting strong demand for a substitute, primarily corn.
Canada corn production for 2021/22 is currently estimated at 14.0 million tons, and this would be the third-largest crop on record. Grown primarily in Ontario, Quebec, and to a lesser extent in Manitoba, some domestic corn may travel west to the Prairies for feed use. However, transportation routes and economics typically favor importing corn from south of the border instead.
U.S. Corn Exports Face Headwinds
U.S. corn exports for 2021/22 (Oct-Sep) are forecast lower this month, reflecting a slower pace of sales, except to the Western Hemisphere. In addition, U.S. corn is expected to face intense competition from Ukraine, Argentina, and Brazil.
Several months into the current season, reported outstanding sales have been slow. The Western Hemisphere has been the bright spot, particularly Mexico and Canada. At the end of December, sales to Mexico totaled 6.5 million tons, up 16 percent from a year ago. Mexico was the top destination for U.S. corn until 2019/20. Sales to Canada are at 2.2 million tons, up nearly nine-fold from a year ago, as the country looks for feedstuffs to substitute for tight grain supplies in the Prairies.
Outstanding sales reported to China remain at 10.0 million tons, compared to 6.5 million a year ago. However, much of the sales on the books were made last May and then carried over to the current season. Fresh sales to China have amounted to approximately 400,000 tons since September.
Strong exports from Ukraine, Argentina, and Brazil are expected to dampen demand for U.S. corn overseas this year. There have been unconfirmed wire news stories that China purchased a large volume of Ukraine corn. Moreover, exports from South America have been stronger than anticipated even though its marketing season is nearing the end.
Despite sluggish foreign demand, U.S. corn remains higher priced than Ukrainian and Argentine corn, supported by U.S. domestic demand for fuel ethanol.
