The U.S. Grains Council is a trade association focused on promoting exports of corn, barley, sorghum, DDGs and ethanol, and they aren’t taking a backseat to COVID-19 as they are continuing to endorse those commodities during the pandemic.
Ryan LeGrand, president and CEO of the U.S. Grains Council said they have nine offices across the world with plans to open their tenth location in Delhi, India later this year.
“Hundred and six employees and consultants here and abroad help us run programs in 50 countries worldwide,” he said.
Grain flows around the world
“It’s very important to note that agriculture and agriculture’s infrastructure have been deemed essential operations, so your work and ours will continue,” said LeGrand. “We’ve been receiving questions and concerns from customers and from governments from around the world about the continuity of operations of the U.S. grain export system. We put out a letter to our customers around the world in attempts to ensure the port operations will continue throughout the pandemic. We think it is very important to continue to ensure to the world we are open for business and we will remain open for business here in the United States.”
LeGrand said ports around the world are remaining operating as well, with the exceptions of some slowdowns in the receipts of vessels while crews are being examined.
“I am hearing some Chinese vessels into other countries are getting extra scrutiny right now, but again, around the world, everything is operating pretty much normally when it comes to the shipment and receipt of grains,” he said.
Regular buyers of U.S. corn – Japan, Korea, Mexico and Colombia, LeGrand said were active as of last month.
“We have been at an eleven month high, we are seeing that uptick in corn shipments and it is a bright spot amongst all the bad news we are seeing and hearing around the world,” he said.
LeGrand said we are waiting on more phases of the agreement, but is unsure how the first phase will be affected by the current pandemic.
“I’m sure it will be slowed down,” he said. “China made some serious commitments to the United States and the world in this phase one. And going forward, we expect them to make drastic changes on their acceptance and approval on new biotech traits. They have agreed to give an average of 24 month turn around on any approvals of new events. If that holds, that is going to be a sweeping change for one of the largest consumers in the world and it will benefit us greatly. Provided China continues to comply with the phase one throughout the year.”
LeGrand said he expects China to be in the market for distillers grains from the United States and when the economics come back into play, we can expect them to be in the market for U.S. ethanol.
Some of China’s recent activity showed a near record purchase at the end of March of about 756,000 metric tons of corn.
“That’s just short of 30 million bushels they bought in one single purchase,” said LeGrand. “That’s the largest purchase on record, from what we have seen in the last seven years by China. Hopefully there are more good things to come with China and other nations. There are some bright spots among the bad news we are hearing.”
LeGrand said the U.S. Grains Council has been on the forefront of ethanol promotion for several years.
“I would consider ethanol as our top priority of present,” he said. “Ethanol has been United States’ fastest growing ag export over the past 10 years, so we are focusing our efforts of exporting this value added product, be we can’t forget the 66% of the exports are attributed to feed grains and distiller dried grains. So, we will continue to put an emphasis of other products as well.”
Currently ethanol prices are very low with gasoline prices much lower than that.
“When you look back historically, ethanol is consistently priced below that of gasoline. That relationship has reversed recently and we are seeing cheap, cheap gasoline prices and it’s making it very difficult for ethanol to compete,” said LeGrand.
When gasoline and ethanol demands return what are the foreign imports that have the potential to import the most?
LeGrand said Canada and Brazil are the top two markets for U.S. ethanol.
“I would expect to continue to see strong shipments there,” he said. “India is a big market for us on the industrial side and we are working on the ground, in India to try to get them to include fuel ethanol in their tenders. They are third or fourth, depending on the year, largest importer of our ethanol in the industrial basis. If they would include it in the fuel that would really put India up close to the top or at the top of our export customers.”
Columbia, he added, continues to take more ethanol every year and Peru has also increased their ethanol shipments from the United States.
“There are some bright spots out there. We just need the gasoline demand to come back,” he said.
LeGrand said buyers of South American corn are looking more to the United States as an origin because they have confidence our supplies will continue to flow.
“They are worried about Argentina. The fear is that Argentina and other grain exporting ports around the world could shut down their operations and that fear isn’t quite as strong with the United States,” he said. “We are seeing the same thing in Taiwan. “Buyers are looking to book premiums in some instances, just because they know the grain they buy from the United States is going to arrive on time at their port.”
A study was commissioned in 2018 to put a value on exports and the contribution of those exports to our ag economy. LeGrand said the results from the analysis show the $19.1 billion in grain and grain products exported indirectly supported a total economic output of $55 billion in 2016.
“In other words, access to international export markets for U.S. grains supported an additional $38 billion in business sales in 2016,” he said. “This goes to show you the work we do around the world. It does have value. It brings value directly back to the farmer’s bottom-line and to the ag economy in general around the United States.”