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World corn production & Export
Issues in corn exporting countries
Impact on U.S corn
prices
World Corn Review 2007 – interactive presentation
Impact on global corn
export
What countries are the world largest producers and exporters of corn?
The latest issues of production and domestic use of corn in major exporting countries
What drive the U.S corn prices up?
How the U.S corn situation affect the global corn export market?
World corn production & Export
Issues in corn exporting countries
Impact on corn
prices
World Corn Review 2007 – interactive presentation
The U.S, China, Brazil, Mexico, and Argentina are the five largest corn producing countries
Those five countries produced nearly 500 million ton in 2006 representing 72% of global corn production
Country 2002 2003 2004 2005 2006USA 227,767 256,278 299,914 282,311 272,931China 121,300 115,830 130,290 139,365 143,000EU-25 49,360 39,876 52,968 48,618 44,385Brazil 44,500 42,000 35,000 41,700 42,000Mexico 19,280 21,800 22,050 19,500 22,000Argentina 15,500 15,000 20,500 15,800 19,000India 11,100 14,720 14,180 15,090 14,500South Africa 9,675 9,700 11,716 6,935 10,000Canada 8,999 9,600 8,840 9,461 9,300Romania 7,300 7,020 12,000 10,300 8,500Indonesia 6,100 6,350 7,200 6,900 6,600Egypt 6,000 5,740 5,840 5,860 5,870Serbia & Montenegro 5,585 3,800 6,569 6,600 6,600Nigeria 5,200 5,500 6,500 7,000 7,500Philippines 4,430 4,900 5,050 5,900 5,800Ukraine 4,180 6,850 8,800 7,150 6,500Others 56,698 60,726 64,855 67,086 68,400World 602,974 625,690 712,272 695,576 692,886
World Corn Production by Major Countries (1,000 MT)
Impact on global corn
export
World Corn Export Share 2006
68%
15%
5%
4%
2%
1%
1%
1%
3%
0% 10% 20% 30% 40% 50% 60% 70%
USA
Argentina
China
Brazil
Ukraine
Serbia & Montenegro
Romania
South Africa
Others
World corn production & Export
Issues in corn exporting countries
Impact on corn
prices
Country 2002 2003 2004 2005 2006USA 40,924 48,809 45,347 56,181 55,500China 15,244 7,553 7,589 3,727 4,000Argentina 12,349 10,439 13,752 10,707 12,000Brazil 3,181 5,818 1,431 2,826 3,500South Africa 1,141 797 1,517 1,406 500Ukraine 811 1,238 2,334 2,464 2,000Serbia & Montenegro 353 57 589 1,274 1,200Romania 144 93 587 271 600Others 4,286 4,435 3,341 4,215 2,525World 78,433 79,239 76,487 83,071 81,825
World Corn Export by Major Countries (1,000 MT)
All five largest corn producing countries, but Mexico, are also major global corn exporters.
Argentina surpassed China as a second
largest corn exporter since 2003
The world is heavily rely on U.S for foreign supply of corn as the country satisfies 68% of global corn export
Impact on global corn
export
World Corn Review 2007 – interactive presentation
World corn production &
Export
Issues in corn exporting countries
Impact on corn
prices
Impact on global corn
export
World Corn Review 2007 – interactive presentation
Increasing Animal Feed
Production
The Need to Develop
Bio Fuel
Large supply of ethanol is necessary
Domestic Demand Pressure for Corn
Less corn available for export
China
World corn production &
Export
Issues in corn exporting countries
Impact on corn
prices
The rising meat consumption…China Meat Consumption (1000 MT)
Beef Beef
Pork
Pork
Broiler
Broiler
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
1995 2005
China Feed Production
87,120
96,600
103,000
75,000
80,000
85,000
90,000
95,000
100,000
105,000
2003 2004 2005
…has resulted in rapid growth of animal feed production
Increased by more than
18%
Impact on global corn
export
World Corn Review 2007 – interactive presentation
China
While government has recently suspended further expansion of its corn ethanol industry in order to halt a rapid increase in corn prices,… …investors and local governments continue preparing new projects. Some processors dodge policy restrictions by claiming to make alcohol.
World corn production &
Export
Issues in corn exporting countries
Impact on corn
prices
Accelerated fossil fuel consumption triggered by industrial and transportation boom…
…make china in a great need to increase bio-fuel production
China Fuel Consumption (10,000 Kilo Litre)
1,859 2,173
11,594
1,2451,744
2,348
3,006
5,868
-
2,000
4,000
6,000
8,000
10,000
12,000
1980 1985 1990 2004
Diesel Oil
Gasoline
Year Production Quantity2002 & Before NA
2003 > 20,000 MT/Year2004 300,000 MT/Year2005 920,000 MT/Year2010 4,000,000 MT/Year
China Ethanol Production
Government set the target of 4 million ton of
ethanol in 2010
Impact on global corn
export
World Corn Review 2007 – interactive presentation
China
China Corn Situation
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2002 2003 2004 2005 2006
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Production Consumption Export
World corn production &
Export
Issues in corn exporting countries
Impact on corn
prices
Ethanol and feed factors make china divert a large part of country’s corn production from export to domestic market by removing export subsidy.
Even China is expected to be net corn importer by 2008
Impact on global corn
export
World Corn Review 2007 – interactive presentation
China
World corn production &
Export
Impact on corn
prices
Issues in corn exporting countries
Argentina is the second largest corn exporter since 2003.
The country has exported 69% of its corn production within 2002 – 2006 period.
Argentina’s much lower corn production level compared to that of U.S, however, make the country less powerful in absorbing any supply disruption.
The efforts to expand corn production by increasing planted area have been constrained by high transportation cost.
Normally, production for export is centered 300-400 kilometers from ports; farther distances are not as profitable.
Impact on global corn
export
World Corn Review 2007 – interactive presentation
Argentina
World corn production &
Export
Issues in corn exporting countries
Impact on corn
prices
USA
Impact on global corn
export
World Corn Review 2007 – interactive presentation
The Growing Criticism
Over The Use of MTBE*
The Need to
Develop Bio Fuel
Large supply of ethanol is necessary
Domestic Demand
Pressure for Corn
Less corn available for export*Methyl Tertiary-Butyl Ether
World corn production &
Export
Impact on corn
prices
Issues in corn exporting countries
Despite country’s position as a largest corn exporter, nearly 90% of U.S. corn production is dedicated for domestic use.
U.S Corn Use 1994-2006
Feed & Residual
Fuel Alcohol
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Seed
Cereals & OtherProductsStarch
Glucose & Dextrose
High-fructose Corn Syrup
Alcohol for Beverages &MfgFuel Alcohol
Feed & Residual
Corn is massively used in industry with feed industry takes the largest share.
Impact on global corn
export
World Corn Review 2007 – interactive presentation
USA
World corn production &
Export
Impact on corn
prices
Issues in corn exporting countries
U.S bio-fuel program and the growing criticism over the use of MTBE has triggered rising ethanol consumption.
EPACT set Renewable Fuel Standard (RFS) that aim at achieving 7.5 billions of gallon bio-fuel by 2012
The already enacted EPACT (Energy Policy Act) 2005 is expected to continue driving up U.S ethanol-based-bio-fuel production.
The U.S Bio-Fuel Program
Impact on global corn
export
World Corn Review 2007 – interactive presentation
USA
World corn production &
Export
Impact on corn
prices
Issues in corn exporting countries
The Clean Air Act Amendments of 1990 require the use of environmental-friendly octane enhancer such as MTBE (methyl tertiary-butyl ether) and ethanol
Since 1992, MTBE has been used at higher concentrations in some gasoline
The possible hazardous groundwater contamination caused by MTBE, however, has prompted the government to consider replacing MTBE with ethanol
California, New York, and Connecticut, the states that were massively use MTBE, have already switched to ethanol since 2004
What’s wrong with MTBE?
Impact on global corn
export
World Corn Review 2007 – interactive presentation
USA
The surge in ethanol production has accelerated growth of domestic corn use
World corn production &
Export
Impact on corn
prices
Issues in corn exporting countries
The recent jump in fuel ethanol production has escalated the use of corn to produce ethanol.
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000Ethanol (Millions of Gallons)
Corn dedicated to produce ethanol (1000 MT)
A large part and even most of the recent growth of the U.S domestic corn use has been driven by ethanol production boom
Growth of U.S Domestic Corn Use by Type of Usage
2.2% 1.9%
3.1%
6.0%
3.2% 4.3%
0.0% -0.3%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
2003 2004 2005 2006
Ethanol Other Usage
Impact on global corn
export
World Corn Review 2007 – interactive presentation
USA
Total Growth 5.4%
6.2%
3.1%
5.7%
World corn production &
Export
Impact on U.S corn
prices
Issues in corn exporting countries
As the U.S corn production cannot proportionally catch up with accelerating domestic corn use, corn ending stock hit the lowest level since the 1995/96 crop yearThe anticipation of lower corn inventory has sparked the recent U.S corn price rally
Corn Price (US$/bu)
1.5
2.0
2.5
3.0
3.5
4.0
Sep Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep Oct
Nov
Dec
Jan
2002 2003 2004 2005 2006 2007
Ethanol-led-demand shock is expected to create permanent increase in both domestic use and price of corn
The increase is likely to be somewhere between $1 and $2 per bushel (Paul Aho: Oct 2006)
2.22
3.89
Impact on global corn
export
World Corn Review 2007 – interactive presentation
World corn production &
Export
Impact on global corn
export
Issues in corn exporting countries
Impact on U.S corn
prices
Since nearly 70% of corn export come from the U.S, the drop in country’s corn inventory has resulted in falling world inventory of corn
The corn importing countries, therefore, are exposed to both the possible supply shortages and hike in price of corn
Ending Stock of World Corn (Million Metric Tonne)
60
80
100
120
140
160
180
200
220
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
World Corn Review 2007 – interactive presentation
The global corn market is also possible to have lower U.S corn available for export in the near future.
Much of the additional corn needed for the U.S ethanol production will be diverted from country’s exports (USDA Baseline Projection 2006).
Indonesia Corn Situation
Production
Domestic Consumption
5,500
6,000
6,500
7,000
7,500
8,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
2003 2004 2005Argentina 0% 12% 87%Thailand 2% 11% 11%United States 0% 21% 2%India 0% 14% 1%Singapore 0% 0% 0%Malaysia 0% 0% 0%Myanmar 0% 0% 0%Korea 1% 0% 0%Austria 0% 2% 0%Brazil 0% 0% 0%China 97% 40% 0%South Africa 0% 0% 0%
Indonesia Corn Import by Country
The reliance on imported corn make Indonesia vulnerable to the recent unfavorable world corn market situation
While recorded mild increase, country’s corn production is still below domestic consumption levelLimited production, however, will directly cut export
supply from Argentina in case of production drop due to harvest failure
Indonesia, therefore, will rely on U.S as a supplier of the last resort and it will bear the direct impact of any U.S corn market disruptions.
World corn production &
Export
Impact on global corn
export
Issues in corn exporting countries
Impact on U.S corn
prices
World Corn Review 2007 – interactive presentation
U.S corn market situation could also have direct impact on Indonesia
The decreasing role of China as one of major corn exporting countries make Indonesia shift to Argentina
For queries please contactFor queries please contact
Ibnu Edy WiyonoIbnu Edy WiyonoEconomic & Business ResearchEconomic & Business ResearchVice Chairman Office – Charoen Pokphand IndonesiaVice Chairman Office – Charoen Pokphand IndonesiaEmailEmail : : [email protected]@cp.co.idPhonePhone : 62-21-6919999, Ext. 504: 62-21-6919999, Ext. 504FaxFax : 62-21-6922274: 62-21-6922274
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