As ethanol plants continue to spring up, many wonder what this will do to corn and soybean exports and the U.S. position of exports in the world. A legitimate question — and the trends are changing.

The tables here reveal an extremely interesting story. On the positive side, the dominance of U.S. producers in the corn export market continues to be strong. Exports worldwide have been growing.

This year it's expected that there will be 91.9 million metric tons (mmt)(one metric ton = 39.3 bu. of corn) exported vs. 77.3 mmt only four years ago. In 2003-2004, U.S. exports accounted for 62% of all world exports, and this year it will be 65%. No country comes close to touching U.S. farmers in the world corn export market.

Argentina is the closest, expected to export 16 mmt this year vs. our 59.7. We are the world's corn producer, corn storer and corn exporter.

Many have assumed that with the shift in production from corn to beans the U.S. will start losing its share of the soybean export market in favor of Brazil and Argentina. The assumptions are somewhat true, but the change in trend has not been as dramatic as some anticipated.

The U.S. still exports a large quantity of soybeans: 26.5 mmt this year (equivalent of 972.5 million bushels; one metric ton = 36.7 bu. of soybeans). This is down from last year's 30.4 mmt, but is close to average when compared to the last five years.

However, both Brazilian and Argentine exports are up dramatically. From the 2003-2004 marketing season, Brazil has increased its exports by 50%. After peaking in 2004-2005 with U.S. exports at 46% of total world exports, this year our percentage of the total is only 35%. Brazil and Argentina combined, however, have gone from 47% of the world export market in 2004-2005 to 54% this year.

Why the changes? Pure and simple — we don't have the soybeans to export. With cash soybeans over $10/bu. right now, obviously the cut in export share hasn't hurt the price that U.S. farmers receive. As of late November, U.S. processors need soybeans even more than they need corn. The supply/demand ratios are out of line, which has pushed soybean prices to nearly all-time new highs.

Overall, soybean worldwide exports have increased dramatically as usage has required. Exports in 2003-2004 were only 56.2 mmt, and this year they will be over 75 mmt.

Where are all the soybeans going? China.

For example, this year China will import 33.5 mmt of soybeans vs. last year's 28.7 — a 17% increase in one year alone. Worldwide corn usage is increasing as well, but not as dramatically as soybeans.

Will The Trend Last?

In my opinion, yes. With the amount of corn acreage needed to fuel the ethanol industry in the U.S., and with soybean acreage going up this coming year — in our estimate from 63.7 million acres to 69 million acres — this is still not going to be a big enough increase to result in any significant increase in carryover supplies. Thus, we're going to need a large majority of the beans raised in the U.S. for domestic use with very few extras being left for export.

But for U.S. farmers this is still a win-win situation. Food product supplies worldwide have been increasing rapidly. We cannot continue to be the world leader in exports in every commodity grown.

When I was in college and on a debate team one year our topic was: “Be it resolved that world trade of agricultural commodities should be based upon the law of comparative advantage.”

In layman's terms, that means if you take down all the trade barriers, commodities will be produced in the areas where they are produced most economically.

Right now, no one can compete with U.S. corn farmers for production techniques and/or climate. In soybeans, it's basically a three-country race between us, Brazil and Argentina.

With the strong demand we have domestically for both corn and soybeans, we should all be happy we have something left to export at all. Farming is good.

Richard A. Brock is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report. For a trial subscription and information on Brock services, call 800-558-3431 or visit www.brockreport.com.