With corn used for ethanol production increasing, concerns have been raised about its impact on U.S. corn exports. Exports for the 2007-08 marketing year (September 1, 2007-August 31, 2008) were record large at 2.436 billion bushels, while exports for this year, 2008-09, are currently forecasted by USDA to be down 28 percent to 1.75 billion bushels, the lowest annual exports since the 2002-03 year of 1.576 billion bushels, with some analysts thinking exports may be an additional 100 million bushels lower. U.S. carryover supplies are expected to be higher than a year earlier while market prices are lower indicating that the reduced exports are not a result of ethanol production bidding supplies away from usual export markets.

From the early 1970s when the modern era of U.S. corn exports began, annual U.S. exports have had wide fluctuations. The previous record export year that was broken in 2007-08 was 2.401 billion bushel in 1979-80. The next largest export year was 1980-81 at 2.394 billion bushels followed by 2.368 billion bushels in 1989-90. The lowest export years were 1985-86 at 1.227 billion bushels and 1.327 billion bushels in 1993-94. Since 1975-76 corn exports averaged 1.887 billion bushels annually, with an average of 1.977 billion bushels in the last ten years.

While annual exports have been flat to up slightly, U.S. corn yields per acre and total production have increased sharply. In the second largest export year of 1979-80 the corn yield was record large for then at 109.5 bushels which required 21.9 million acres to grow the 2.401 billion bushels exported. The yield in 2007-08 was 150.7 bushels per acre, about 10 bushels short of the record of 160.4 bushels set in 2004-05, and only 16.2 million acres were needed for the record exports, 26 percent less acres for roughly the same exports in 1979-80. Corn exports accounted for 18.7 percent of production in 2007-08 compared to 30.3 percent in 1979-80, a 38 percent decline.

U.S. corn importing countries are a combination of steady customers and transitional ones that become important and then fade away. In 1975/76, the EU-15 was the largest market for U.S. corn at 670 million bushels followed by the former Soviet Union with 390 million bushels and Japan at 210 million bushels. The EU-15 market quickly declined to a 150 million bushel market by 1985, and the EU-27 purchased only 6 million bushels in 2007-08. Soviet Union purchases declined to 270 million bushels by 1985 and then faded away.

Japan has grown to be the leading U.S. market for corn at 600 million bushels per year. The second largest market in 2007/08 was Mexico at 375 million bushels compared to purchases of only 40 million bushels in 1975. South Korea was the third largest market in 2007/08 at 330 million bushels, much higher than the 150-250 million bushels purchased in recent years. They are likely to substitute cheaper EU feed wheat this year. Next was Taiwan at 150 million bushels and Canada and Egypt at 120 million bushels each. Canada’s imports in 2007/08 were up from recent years, while Taiwan and Egypt were down.

U.S. customers vary by their level of economic development. In 2007/08 developed countries accounted for about 35 percent of U.S. corn exports, middle income developing countries and those with petroleum resources accounted for 50 percent, and lower income developing countries were 15 percent. Those middle income developing and petroleum countries will likely have the greatest opportunities for further market growth.

The record U.S. corn exports for 2007-08 were driven by a group of countries, and the EU that currently imports very little U.S. corn. The EU had back-to-back smaller than average wheat crops in 2006 and 2007. According to USDA Foreign Agricultural Service estimates almost half of the wheat consumed in the EU is fed to livestock. The decline in wheat production in 2006/07 and 2007/08 led to a sharp rise in wheat and coarse grains (mostly corn) imports from an average of 9.8 MMT in 2004/05 and 2005/06 to 13.1 MMT in 2006/07 and 26.7 MMT in 2007/08. That was a shift of almost 20 MMT in net imports, and accounted for 8.3 percent of world trade in wheat and course grains in 2007/08 and 83 percent of the 23.8 MMT increase in world trade to 242.2 MMT in 2007/08. The U.S. did not send more corn to the EU, but replaced other corn that moved to the EU market. For 2008/09 the EU is expected to have a net reduction of 26 MMT in trade as total world trade in wheat and coarse grains declines by 10 MMT.

The U.S. could have larger corn exports for this year than the current USDA projections of 1.75 billion bushels if dry weather in Argentina continues, middle income developing countries purchase more corn and China, speculated to be a new market some day, were to suddenly import corn. The U.S. will likely gain markets from Argentina based on current conditions, but the worldwide economic slowdown is not likely to provide for an opportunity for middle income countries to buy more corn. China had a good corn crop in 2008 and is more likely to be a modest exporter than an importer.

Exports will continue to be an important market for U.S. corn producers, but the large exports in 2007/08 should not be looked at as an indication that the U.S. has broken out of the 30 year pattern of a sideways to slight up trend in corn exports. If U.S. corn yields per acre continue to increase in the next few years as many analysts expect, corn exports over the next few years will likely continue to take a smaller share of the total acres of corn produced in the U.S. If increased uses for corn are not developed in the U.S., new international markets will have to be developed beyond those that now provide most of U.S. corn export opportunities or U.S. corn acres will need to decline.