Expectations for Corn Exports 2015

In recent months the dollar has strengthened in the US against foreign currencies¹. The forecast US agricultural trade surplus is forecast to be $22.5 billion (US), this is a 48%² decrease from the previous year (USDA). Given the recent decrease in corn prices, producers may be justifiably worried about their potential to export corn during 2015.

For fiscal year 2014³ 50.5 million metric tons of corn were exported from the US; this equates out to $11.1 billion dollars (USDA). This year US producers are forecast to export about 44.5 million metric tons of corn in the first quarter of 2015, valued at $9.5 billion last November and $10.3 billion this past February⁴.

One of the reasons why prices and volume are better than other agriculture exports may be due to tighter corn supplies predicted for the 2015 fiscal year. Another reason may be due to the fact that even though the dollar is stronger now, corn prices fell in the last year. This price drop may help offset the change in the comparative value of the dollar, and actually allow for increased exports.

Corn producers in particular need to be aware of the changes in the value of the dollar because on average 20% of all their corn is exported (ERS). This means that if the dollar continues to strengthen over the long term it could potentially affect their bottom line.

Disclaimer: The information in this article is believed to be reliable and correct. However, no guarantee or warranty is provided for its accuracy or completeness. This information is provided exclusively for educational purposes and any action or inaction or decisions made as the result of reading this material is solely the responsibility of the reader. The author(s) and South Dakota State University disclaim any responsibility for losses associated with the use of this information.

1. The reason it’s more expensive to export when the dollar is strong is because the cost of our products have gone up. Let’s consider the example of an item that cost $1.00 to produce last year in the US Vs. cost ¥1,000 in Japan. If the dollar strengthens by 25% in comparison to the rest of the world market, then the item still costs $1.00 to produce locally, but in Japan now costs ¥1,250 to purchase it.
2. This is a decrease of $20.8 billion
3. Fiscal year
4. These estimates are for the first quarter of 2015 Fiscal year

Source: Shannon Sand, South Dakota State University