US farmers heading for record corn yields

This year, the United States expects a record corn yield of more than 12 tons per hectare. This was noted by Andrew Swanson, agricultural economist at the University of California at Davis (UC Davis). The expert analyzed the cultivation of corn in the country and assessed the prospects for the development of the global export market of the crop.

Ot emphasized that in the 1940s, corn yields were six times lower. It has increased due to advances in hybrid seed genetics, biotechnology and precision farming. The advent of genetically modified (GM) corn varieties, first introduced to the market in 1996, allowed farmers to significantly increase production. Today, more than 90 percent of U.S. corn acreage is planted with genetically modified seeds that are resistant to pests and herbicides.

“Corn is the most widely planted crop in the U.S., both in terms of acreage and production. U.S. producers harvest about 200 million tons of grain from more than 36 million acres, making the United States the world’s leading corn producer and generating about $60 billion a year for the economy. Fluctuations in corn prices can increase that figure, with high demand bringing the market value of the crop closer to $75 billion. Although agriculture accounts for only about 5 percent of the U.S. economy, in states such as Iowa, Nebraska and Illinois, corn is a cornerstone that supports local rural communities,” the specialist said.

The dominance of corn in the U.S. agricultural sector is a relatively new phenomenon. Wheat used to be the primary grain crop, but changes in agricultural policy and trade dynamics in the second half of the 20th century made corn and soybeans more profitable.

“Corn began to displace wheat in the 1980s and 1990s. The increase in acreage under the crop has changed the agricultural landscape, especially in the last 20 years,” Swanson said.

Today, more than 40 percent of the corn grown in the U.S. is used as feed for cattle, hogs and poultry. The entire livestock industry supported by corn feed generates more than $100 billion in profits annually.

A major driver of corn demand over the past two decades has been the increase in ethanol production. Approximately 30% of the U.S. corn crop is now used for this purpose.

At the same time, U.S. corn producers are facing growing competition in global markets. Brazil has emerged as a serious contender, even though the country produces a third less corn than the US. In 2019 and 2022, Brazil surpassed the U.S. in corn exports. The success is largely due to favorable trade agreements with China.

China used to be a major buyer of U.S. corn, importing billions of bushels annually to feed a growing population that now stands at 1.41 billion. However, the trade war between the U.S. and China that began in 2018 has significantly changed that dynamic. Tariffs imposed by both countries have led to higher prices and disruptions in trade. This opened the door for Brazil. In 2022, China imported more than 80% of all imported corn from the country.

The U.S. has strong trade relations with other countries as well, particularly Japan and Mexico, which accounts for 25% of U.S. corn exports.

The most promising markets for corn, according to Swanson, are the Philippines, Indonesia and India, where demand for corn products is expected to grow. These growing young economies offer great opportunities for exports.

As for the future, the expert predicts a decline in corn prices due to the record harvest in the United States. But serious consequences for the world market may be borne by the reduction of corn production in China. Extreme weather conditions, from abnormal heat to floods, prevented China from harvesting this year. Production could fall by 5 million to 20 million tons, creating a shortfall that could be filled by corn from the U.S. and other countries.

“In the long term, adapting to changes in the global economy will be key, and identifying areas for expansion and growth in new markets offers corn producers exciting potential for prosperity in the coming years,” the analyst wrote.

Tags: corn, USA