CHAMPAIGN, Ill. — The global transportation channels that move agricultural export products continue to flow smoothly.
“The reports that we’re hearing are that business continues largely as normal. We’re not hearing of any slowdowns here on the U.S. side,” said Ryan LeGrand, president and CEO of the U.S. Grains Council, during a University of Illinois farmdoc webinar.
“It’s very important to continue to ensure to the world that we are open for business, and we will remain open for business here in the United States. Around the world we’re hearing reports from ports that they, too, are largely operational.”
After receiving questions and concerns from U.S. export customers and other governments, USGC contacted port operators in New Orleans and the Pacific Northwest, container loaders throughout the country and with groups such as the Waterways Council to see if there were any problems in the system as a result of the COVID-19 pandemic.
The council, in turn, contacted the nation’s customers around the world to assure them that U.S. port operations will continue throughout the pandemic.
USGC also released a video on social media and other outlets March 31 that said the Mississippi River system continues to function despite COVID-19.
“Rest assured that despite today’s uncertainty, the U.S. will continue to remain the most reliable feed grain supplier in the world. We are open for business, 365 days per year, and we will continue to be there for you during this crisis,” the video stated.
Workers will continue to inspect barges under new safety protocol to prevent COVID-19 from affecting the port system. Third-party inspectors remain staffed and ready to service the needs of international customers.
“Maybe there are some slowdowns in the receipt of vessels as they check crews and such and if there are any coronavirus infections there amongst the crew, they would take additional measures at those foreign ports. I’m hearing Chinese vessels entering other countries are getting extra scrutiny right now, but everything is operating pretty much normally around the world when it comes to the shipment and the receipt of grains,” LeGrand said.
Recent purchases of U.S. grain exemplify how the export system continues to operate.
China recently purchased nearly 30 million bushels of corn, the largest single purchase of corn by that country in the last seven years.
Most recently, about 9.8 million bushels of corn were sold to unknown destinations.
“We do suspect that it’s China taking advantage of the dip in the market. They typically classify those as unknown destinations, one, to hide the trade and, two, to make a decision depending on circumstances at the time of shipment where exactly they want to ship it. So, if it doesn’t work at China at that time they can ship it to another destination,” LeGrand said.
“Over 1 million metric tons of sorghum has been recently sold to China, and we expect that there’s more behind that.”
The regular purchasers of U.S. corn such as Japan, South Korea, Mexico and Colombia continue to be active. Japan recently purchased 4.5 million bushels of corn.
“Last week’s corn shipments were at an 11-month high, still off USDA’s projected number for this crop year by about 130 million bushels, but seeing that up-tick in corn shipments is a bright spot amongst all of the bad news that we’re seeing and hearing around the world,” LeGrand said.
China is working to register the U.S. ethanol plants in order to resume DDGS exports there. That has the potential to open a 5 million metric ton market for the product from U.S. ethanol plants.
China has an anti-dumping and countervailing duty case against U.S. DDGS, but purchases of the ethanol co-product were part of the “Phase 1” trade deal.
LeGrand expects to see exemptions to the duties that have been levied on U.S. DDGS.
“Hopefully, there are more good things to come with trade with China and other nations. There are some bright spots amongst all the bad news that we’re hearing,” he said.
More Good News
There is plenty of other good news in the grain export realm besides the purchases by China and others.
“One piece of information that we’re hearing from around the world is that there is there’s confidence in the U.S. grain export system and for that reason buyers in North Africa, which are typically buyers of South American corn, are looking more and more to the United States as an origin because they have confidence that our supplies will continue to flow,” LeGrand noted.
“They’re worried about Argentina. About 10 days ago Argentina briefly shut down their Rosario port which is their main grain exporting hub. It was opened very quickly after that, but the fear is there 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.
“We’re seeing the same thing in Taiwan where buyers are looking to book premiums in some instances just because they know that the grain they buy from the United States is going to arrive on time at their port.”