Trade developments produce optimism for farmers
U.S. Grains Council CEO Ryan LeGrand has a firm understanding of COVID-19’s international impact, as he navigates the pandemic to continue to grow markets abroad for American grains. While keeping his employees around the globe safe, LeGrand remains focused on strengthening the momentum established prior to the world turning to address the crisis.
Over the last 10 years, ethanol has been the fastest growing U.S. agricultural export product. Enter COVID-19, and the production of ethanol plummeted stateside in response to declining oil prices and reduced demand around the world. LeGrand expects the historical price relationship between ethanol and oil to resume following the pandemic, and at that point, the benefits of ethanol will once again prevail with international customers.
“We know eventually the price relationship and driving habits will return to normal,” LeGrand said. “At that time, the benefits of ethanol are clear when it comes to greenhouse gases and emissions. It is going to come back, but it may take a while.”
For grain, purchasing activity has ebbed and flowed as buyers look to take advantage of dips in the market. Looking long term, LeGrand believes life will return to near normal, with people resuming the activities they enjoy once they feel safe. For example, people will eventually return to restaurants, where they historically consume more meat products than they do at home. Factors like this will help stabilize global demand for corn and other grains.
A major bright spot for corn farmers today has been China’s involvement in the market. The country has emerged as the fifth largest buyer of American corn over the last year, barely trailing South Korea. China also trails only Mexico in the purchasing of new crop. While LeGrand is cautiously optimistic until shipments arrive, the development is welcomed.
“There is a lot to be said in terms of our overall relationship with China, but right now, as far as corn and sorghum goes, China is really stepping up to the plate.”
In addition to China, LeGrand sees Southeast Asia as emerging markets for corn and value-added products from corn. Vietnam, for example, is one of the largest corn importers in the world, and there is great market share potential for America if a free trade agreement is reached. Indonesia also has tremendous potential for ethanol, which, for the first time, has been included in the country’s international tender.
Further out on the horizon, Africa has great potential for America’s corn farmers, as economic vitality improves in its nations, according to LeGrand. The Office of the United States Trade Representative has begun trade negotiations with Kenya, which could serve as a road map for future negotiations with African countries.
The Minnesota Corn Growers Association works closely with the U.S. Grains Council to promote trade, including hosting trade delegates and sending corn farmers abroad to market their product. Learn more about U.S. Grains Council and their efforts to develop markets for American farmers at grains.org
