by PressU.S. dominance of the grain market may weaken
U.S. domination of the grain market: why the country could lose its position
The U.S. has long been the market leader in grain exports. They are the main suppliers of corn, soybeans and wheat, annually increasing the volume of shipments and influencing the formation of prices. However, experts say that the United States’ domination on the grain market is coming to an end. Moreover, export from the country is still big, but it is more and more difficult for the United States to dictate its terms.
The reason for the weakening of positions was a sharp increase in demand for oilseeds and grains, which entailed rise in prices. In addition, against the background of the pandemic and domestic problems, the once strong and stable dollar showed its fragility and weakened its presence on the world market. Weather conditions contributed to the decline in the importance of the U.S. — for several years the country had low harvests, which led to a reduction in supplies.
The U.S. accounts for slightly more than 25% of the world’s corn, soybeans and wheat reserves. And for 30 years that figure was at 50%. In addition, the country produces about 25% of the world’s total cultivation of these crops. In this case, too, there is a decrease, but it is not as significant as in the case of exports.
However, the U.S. Department of Agriculture has high expectations for the current season. They expect shipments of corn and soybeans to reach record levels, thanks to increased demand from China.
The U.S. has dominated the soybean market since the 1970s, when the country supplied about 95% of global demand for the crop. Gradually they began to catch up with Brazil, which in the last 10 years has made a huge leap, significantly increasing its presence in the market. Brazil managed to displace the U.S. from its position as the main exporter in 2012, when the U.S. had two consecutive years of poor harvests. The South American country now accounts for 50% of the world’s soybean supply, while the U.S. share is only 30%.
As for corn exports, the United States remains the leader, but the 2012 drought hit yields hard, and its effects are still being felt.
The U.S. is second behind Russia in wheat shipments, with Canada in third place. In 10 years, the U.S. share of total exports has fallen from 23% to 14%.
The increase in the cost of grain on the market motivates farmers from other countries to increase crop production. This in turn increases competition among exporters, which the U.S. can not always withstand with dignity.