The drive behind the global demand for corn
Humans have cultivated corn for approximately 10,000 years. First appreciated by the indigenous people in Mexico, the grain has become a staple worldwide. Commonly known as maize, the commodity continues to see an increase in trade and consumption across the globe.
A clear leader
The United States is the largest exporter of corn, shipping out exports worth $23.9 billion in 2021. Heading south, Argentina came in second, with an export value of $8.88 billion. Ukraine saw a value of $5.86 billion, while Brazil and France rounded off fourth and fifth places with export values of $4.44 billion and $1.92 billion, respectively.
The US's 36% global share in the corn export market accounted for the vast majority of North American exports, with Canada and Mexico holding 0.94% and 0.11%, respectively. The US dominance in the field makes North America the largest corn-exporting continent in the world, whereas Asia is the smallest global exporter. India is the largest exporter in the region, with just a global share of 1.78%.
The Corn Belt, an area in the Midwest covering 14 states, dominates US corn production. This area has been a stronghold in agriculture since the 1850s, thanks to its deep fertile soil, and high organic matter concentration.
The US's robust presence continued into the 2021/2022 season. It held a 31.52% share in production, with China following with 22.38%. Brazil fell behind with nearly half of China's holdings, reporting a 9.52% share.
Interestingly, South Africa is the only nation with any notable corn production activity in Africa. However, it accounts for just 1.34% of global production.
The US is also the largest consumer of corn in the world. During the 2021/2022 period, it consumed approximately 12.4 billion bushels of corn. Second-placed China was not far behind, consuming about 11.57 billion bushels of corn in the same period.
In 2021, Asia dominated imports, with China topping the list at $7.09 billion in imports. The only non-Asian country in the top five, Mexico, imported corn worth $4.62 billion. Japan came in third with imports worth $3.93 billion, while South Korea's and Vietnam's imports, each worth $2.88 billion and $2.49 billion, earned them fourth and fifth place.
Covering several bases
Corn is one of the most produced crops in the world. It has several use cases, including animal feed, flour production, sweetener alternatives, and transport fuel.
The World Economic Forum (WEF) highlights:
“In a world where commodities like corn are often taken for granted, it’s important to think about how valuable it can be. A single bushel of corn can provide 33 lbs of sweetener, 31.5 lbs of starch, or 22.4 lbs of polymers. It’s also enough to produce around 3 gallons of ethanol fuel and 16 lbs of distillers dried grains for animal feed. The uses of corn go far beyond the cob, and just like other raw materials, it supports many industries that make modern life possible.”
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Individual corn products are helping to drive demand. The commodity is experiencing an increase in trade due to the consumption of processed food and beverage items. For instance, corn starch serves as an excellent example of this trend.
Maximize Market Research notes:
“Corn starch is a common ingredient made from the starchy portion of corn kernels known as the endosperm. It's used as a thickening agent for gravies, marinades, sauces, soups, and casseroles. The corn starch market is increasing at a significant rate due to its wide range of applications in food, feed, and industrial use.”
The global corn starch market is expected to grow from $20.70 billion in 2022 to $35.94 billion in 2029. The forecast period will experience a compound annual growth rate (CAGR) of 8.2%.
Meanwhile, the corn flour market will be valued at $34.52 billion by 2033, driven by the demand for gluten-free and plant-based products. This factor contributes to a projected CAGR of 6.3%.
Recent hurdles
Corn’s supply chain had to adapt following Russia’s invasion of Ukraine. The war raised concerns surrounding Black Sea imports, leading to spiked commodity prices related to Ukrainian trade. In early April 2022, futures contracts for maize traded at approximately $8 per bushel, the highest price since September 2012.
The Black Sea Grain Initiative helped to ease tensions, with around 25.5 million bushels of Ukrainian grain returning to foreign markets in August of last year. However, Russia later abandoned the grain agreement, causing maize prices to surge again. The initiative then expired on July 17th. Cargo ships have had to adapt to avoid blockades and other challenging obstacles.
Overall, 2022/23 Ukrainian corn exports, ending on June 30th, tallied up to 29.1 million tonnes, representing a 24% rise from the previous season.
China's demand for corn is creating opportunities for other nations. For instance, Brazil is projected to export five million tonnes of corn to China this year, making it one of the largest exporters in the world.?
Brazilian corn is now priced lesser than US corn, allowing the South American nation to expand its presence in the market. As a result, Brazilian maize exports could increase by 8% in 2023, supported by weaker harvests in Argentina, the US, and Ukraine.
While animal feed makes up a significant portion of corn usage, contributing to 40% of the US's corn deployment, corn's versatility ensures that it will remain in high demand across various sectors in the future. If there are difficulties in production in a particular region, we can expect others to step up to the occasion in the coming years.