The US is shrinking in importance as a global supplier

For several reasons, the landscape of global agriculture is shifting and with it the centers of power. Those shifts have tended to be away from North America and the US, south to Brazil, and east to the Black Sea and Europe.

If one uses world trade as a proxy for the most important suppliers of ag commodities globally, the US is shrinking in importance, while Brazil and Ukraine especially are growing. The US market share of world corn exports approached 60% in the five years of 2005/06-2017/18, in the most recent five years that share has shrunk to 33%. Most of that share has been taken by Brazil, doubling their market share and Ukraine more than tripling their market share.

While the shift is not as dramatic in wheat, a move from North America (the US and Canada) to the EU and the Black Sea (Russia and Ukraine). In the five-year period of 2005/06-2009/10, the US and Canada combined represented 36% of world wheat exports. In the most recent five-year period, that market share has shrunk to 25%, with the US shrinking from 22% to 13%. That share was mostly lost to the EU and the Black Sea. In the same five-year periods export market share of the EU and the Black Sea (Russia and Ukraine) went from 31% to 45% with Russia and Ukraine's market share nearly doubling.

Now more than ever, one needs to think globally to fully understand what is driving agricultural markets. With this shift away from the US to other countries and regions come additional weather/production considerations, currency risks, geopolitical risks, and shipping/trade considerations.

IHS Markit, with its resources and analysis in macroeconomic, country risk, maritime and world trade, energy, and currency markets, is uniquely positioned to cover the new world of agricultural commodities.

Posted 06 January 2022 by . [pulled from SAP], Executive Director, Research and Analysis, IHS Markit