Driving the Markets, Corn Producers Look to Korean Pork Exports
By Zoe Schultz, Kansas Corn Intern
USDA projections for 2020 corn production are currently at 14.72 billion bushels, an eight percent increase from 2019. Hitting closer to home, Kansas alone is projected to harvest 5.75 million acres of corn this fall. Factors such as increased supply projections and trade challenges due to the pandemic make exports of corn in all forms a higher priority than ever before for our nation’s corn farmers. We are good at growing it, but where will it all go after harvest?
The Kansas Corn Commission (KCC) continues to actively build markets for livestock through the support of the U.S. Meat Export Federation (USMEF.) Kansas Corn was one of the first corn checkoff organizations in the nation to support USEMF and has supported USMEF’s efforts for nearly 40 years. As Kansas agricultural producers wrap up another successful corn harvest, the need for exports remains vitally important.
“Anything we can do as an organization to strength foreign demand of United States produced pork will be beneficial to corn producers,” says Josh Roe, Vice President of Market Development and Policy for Kansas Corn. “Our partnership with organizations such as USMEF not only benefits U.S corn and livestock producers, but also foreign consumers by providing high quality products at an affordable cost.”
Additional economic gain directly occurs when we can process corn before it leaves the state or country. “Processing corn into ethanol and high protein co-products that are incorporated into swine diets and then exported as pork is a prime example,” he adds, “because the economy captures gains from the corn, ethanol, distillers, swine and finally pork processing stages.”
Despite increased competition from Brazil and Argentina, the United States is the top supplier for the Korean corn market. But why?As mentioned in a recent report from the USDA, “Korean imports of corn are poised for growth due to the increase in domestic swine and poultry inventories.”
The United States Meat Export Federation (USMEF) says that since 2015, beef and pork exports will potentially be the fastest growing market for corn. United States consumer-based exports increased by nearly 46 percent in 2012 to almost 56 percent into 2017 through the initiation of KORUS, or the Korea Free Trade Agreement. The United States-Korea Free Trade Agreement (KORUS FTA) was signed in June of 2007 and initiated on March 15, 2012. According to an article written by the USDA on U.S Agricultural Export Opportunities in South Korea, “Since the initiation of KORUS, United States intermediate agricultural exports remain stable at $1.3 billion, with the value of U.S. bulk continue to fluctuate between $1.2 and $2.2 billion based on global market fluctuations.” Through these few statistics from AgWeb, you can note that as market development continues to increase with Korea, value of pork exports continues to reassure corn producers.
- In 2019, beef and pork exports contributed more than 12% of the per bushel price of corn ($0.46/bushel) of an annual average price of $3.75/bushel.
- In 2019, beef and pork exports used 480 million bushels of corn. Corn revenue generated by pork exports totaled $1.8 billion.
- Beef and pork exports also used about 3 million tons of distiller’s dried grain with solubles (DDG) at an annual average price of $137/ton. In return, this generated $411.8 million in revenue for ethanol mills’ co-products
United States corn growers are experiencing a rather unexpected, yet appreciated market rally following a difficult response to the COVID-19 pandemic beginning in March of this year. After corn futures declined by nearly 15% during from the COVID-19 pandemic, the 79.25-cent jump off August lows was one of the largest to be seen since December grain futures in 2006. In a recent update from the United States Department of Agriculture (USDA), they are now projecting the U.S cash corn price for 2020-2021 to be an average of $3.60 per bushel. This is a nearly $.10 per bushel increase from the September estimate.