Author: Yuri Clemets Daglia Calil

Ribera (2023) showed Brazil challenging the U.S. as the top corn exporter. Here, I explore this competition dynamic a little further. Figure 1 shows that most U.S. and Brazilian exports occur at different times of the year. U.S. corn predominates in the first half of the year and Brazilian corn in the second half. In the soybean market, the opposite occurs. I added soybean to the analysis because Brazil has two corn crop seasons yearly. The first one competes with soybeans for land.  

Figure 1 – Corn and Soybean Exports: U.S. vs. Brazil

Figure 2 – Corn and Soybean Prices

Sources for Fig.1 and 2: USDA/FAS-GATS (2023) provides the U.S. value and volume. MAPA-Agrostat (2023) provides the Brazilian value and volume. Prices are the ratio of value over volume. The bars show the harvest season for each crop and country, according to USDA/FAS -IPAD (2023). Green bars correspond to harvest season in Brazil. Red bars account for harvest season in the U.S. For Brazilian corn, the light green bar indicates the first crop, and dark green the second crop.  

Companhia Nacional de Abastecimento CONAB (2023) estimated 317.6 M. tons of all grain produced in Brazil for the 2022/2023 crop season. Soybeans and corn make up 88.9% of this total. However, the static storage capacity is only 192.4 M. tons. As a result, there is a total deficit of 125.2 M. tons. Figure 3 shows corn and soybean surpassing the static storage capacity. Indeed, the installed capacity can handle only 68% of the current year’s soybean and corn production.

Figure 3 – Static Storage Capacity versus Soybean and Corn Production

The storage capacity geographical distribution could be more convenient. The Midwest states, the leading producers, can store approximately 50% of the soybean and corn they harvest. Furthermore, only 15.5% of static storage capacity is within farms. As a result, most farmers need to sell soybeans or corn even if prices are not attractive. This intensified selling increases the downward pressure on prices. Such behavior may help explain the price differences in Figure 2. So, the lack of storage capacity may lead Brazil to a pyrrhic victory – champion of volume, but with lower prices.

References

CONAB (2023). Retrieved from: https://www.conab.gov.br/

MAPA-Agrostat (2023). Retrieved from: https://indicadores.agricultura.gov.br/agrostat/index.htm

Ribera, Luis. “Brazil Challenging U.S. Corn Export Top Spot.” Southern Ag Today 3(4.4). January 26, 2023.

USDA/FAS-GATS (2023). Retrieved from: https://apps.fas.usda.gov/gats/default.aspxUSDA/FAS -IPAD (2023). Retrieved from: https://ipad.fas.usda.gov/ogamaps/cropcalendar.aspx

The United States and Brazil are the leading beef exporters (Figure 1). However, they focus on different markets. Figure 2 illustrates the world trade flow value in 2020. Accordingly, China is the leading destination for Brazilian beef ($4.1bn), while Japan is the primary consumer of American meat ($2bn). Nevertheless, the U.S. has a more diversified client portfolio, with relevant exports to Japan (27%^[1]), Korea (24%), Mexico (10%), Hong Kong (8.5%), and Canada (7.5%). As for Brazil, most exports are destined for China (50%), Hong Kong (14%), and Egypt (8.7%). 

Figure 1 – 2020 Beef Trade: Top, Growing, and Declining Exporters (Value) 

The two countries compete in the Hong Kong market more directly, which imported 42% (309k tons) of its beef from Brazil and 11% (81.3k tons) from the U.S. in 2020. However, when we compare the values of meat imports from Hong Kong, Brazil’s share drops to 39% ($1.1bn), and the U.S. rises to 22% ($635m). Boneless beef cuts (frozen) show America’s superior ability to market its product. Worldwide, American frozen beef had an average premium of 24% over Brazilian meat in 2020. In the case of Hong Kong, that year, Brazil exported 182k tons ($771m) and the U.S. 56.9k tons ($462m) of frozen beef, a 92% premium for the American product. Furthermore, the 2020 Phase One Trade Agreement opened the Chinese market to the U.S., bringing competition from the two largest exporters to the most prominent and growing consumer market.

Figure 2 – 2020 World Beef Trade (Value) 

Unlike Brazil, the U.S. is a significant beef importer (Figure 3), mainly from Canada ($1.8bn), Australia ($1.5bn), and Mexico ($1.5bn). Australia competes for the Korean and Japanese markets with the U.S. and the Chinese markets with Brazil. Beef trade between the U.S. and Brazil is timid, as the U.S. exported $33m to Brazil and imported $154m from the country between 2015 and 2020 (CHRTD, 2022).

Figure 3 – 2020 Beef Trade: Top, Growing, and Declining Importers (Value) 

---

^[1] The percentages correspond to the total value exported in 2020.

Reference

CHRTD – Chatham House Resource Trade Earth. Trade Data. 2022. Available online: https://resourcetrade.earth/

---

Author: Yuri Clements Daglia Calil 

Assistant Professor and Extension Specialist

Texas A&M University

yuri.calil@ag.tamu.edu

---

Clemets Daglia Calil, Yuri . “The U.S. and Brazil in International Beef Markets.” Southern Ag Today 2(51.4). December 15, 2022. Permalink