Although the cost of production rose in both countries in 2023, U.S. corn growers have an advantage over their Brazilian rivals with lower per-bushel costs, according to four agricultural economists at the farmdoc daily blog. The United States grows three times as much corn as Brazil, but Brazil is forecast to be the world’s top corn exporter for the second year in a row.
U.S. yields per acre are much higher than in Brazil, and that helps defray direct production costs that include fertilizer, seed, pesticides, storage, drying, and crop insurance. Direct costs average $1.96 a bushel in central Illinois and $2.24 a bushel in Mato Grosso, two high-volume corn-producing regions. Fertilizer, drying, and storage costs are higher in Brazil.
Direct costs have been on the rise in both regions since 2016. They were the highest ever for Mato Grosso in 2022/23, though a decline is expected in the 2023/24 growing year, “which is also in line with cost projections for Illinois,” wrote agricultural economists Joana Colussi, Nick Paulson, and Gary Schnitkey of the University of Illinois and Carl Zulauf of Ohio State University.
The USDA recently said that Brazil had improved its export competitiveness with the United States over the past decade by paving roads, building rail lines, and opening export terminals.
EDITOR’S TAKE:
At first glance, the prediction that Brazil will export more than the U.S. despite higher per bushel production costs doesn’t quite make sense. But let’s take a step back and examine this a bit further. Several factors come to mind that might explain this conundrum. Much of the U.S. crop is used domestically for cattle feed, ethanol production and human food products. In addition, corn importers must weigh the value of our dollar relative to the Brazilian currency (R$). The importer must also take into account shipping costs to their destination. And, geopolitical conflicts can weigh heavily on where an importer might look for the products they demand. All that said, U.S. producers still have a competitive advantage producing corn. That will help not only our domestic livestock industries, but is also a head start when it comes to exports to many parts of the world. U.S. farmers/ranchers are the best at what they do. Make sure you put them on your preferred customer list in 2024.
