[Reuters Analysis] US corn exports and Brazil tariffs: Braun

By Karen Braun

NAPERVILLE, Illinois, July 10 (Reuters) - U.S. corn exports and export sales are still on fire despite the imminent ramp-up of Brazil’s corn shipping season, and the U.S. government might need to up its export target yet again.

Brazil was also making headlines in commodity markets on Thursday after the announcement of U.S. tariffs, a move that could ultimately prove harmful to future U.S. grain export potential.

Data from the U.S. Department of Agriculture on Thursday showed 2024-25 U.S. corn export sales at 69.4 million metric tons (2.73 billion bushels) as of July 3. That included a record weekly volume in the latest week, well above all trade estimates.

USDA’s latest 2024-25 export estimate of 2.65 billion bushels sits below the latest sales total, supportive of an upward adjustment in Friday’s supply and demand report.

There were three other times within the past couple of decades when early July corn export sales exceeded USDA’s June forecast, and final exports in all three seasons were at least 4% higher than what USDA had been estimating in June.

However, two of those seasons featured crop shortfalls in South America, which is not the case this year, potentially limiting U.S. export upside. Brazilian agency Conab on Thursday increased the 2024-25 corn crop to record levels, up 14% from last year.

But Brazil has gotten a slow start to its corn exporting season, perhaps benefitting U.S. suppliers. Brazil’s shipments typically spike in July, though this month’s volume may not be record-setting.

Brazilian corn not only has to contend with U.S. competition, but it may also have to compete for port space with soybeans, which may have a more extended export season.

This could limit U.S. corn exports for 2025-26, which starts on September 1. USDA’s current 2025-26 export target is also lofty and potentially questionable given the strong South American offering, but the early progress is good, as are the U.S. harvest prospects.

As of July 3, U.S. export sales for 2025-26 totaled an above-average 5.42 million tons. That is a nine-year high for the date when excluding sales to China, which has not bought significant U.S. corn volumes in over two years.

BRAZIL TARIFFS

The Trump administration on Wednesday announced 50% tariffs on products from Brazil starting August 1, which were linked to Brazil’s legal proceedings against former President Jair Bolsonaro, an ally of U.S. President Donald Trump.

It certainly has nothing to do with trade balance, which has been the focus of U.S. tariffs on other trading partners. The United States enjoys a moderate trade surplus with Brazil when it comes to all goods.

However, the U.S. is in a steep deficit when it comes to agricultural trade with Brazil, primarily due to Brazil’s ability to produce coffee, sugar and fruits. More than half of the orange juice consumed in the United States now comes from Brazilian oranges.

Over 99% of the coffee consumed in the United States is imported and Brazil supplied 30% of that last year, nearly $2 billion worth. Forest products and beef were Brazil’s next-largest offerings last year, combining for nearly $3 billion, so the tariffs could certainly raise food and beverage prices for American consumers should they take effect.

But there is a scenario where the American grain farmer feels pain from U.S. tariffs against Brazil, particularly if the situation is drawn out.

The Brazilian real BRL= tumbled sharply on Wednesday’s announcement and then rebounded some on Thursday. After establishing record weakness against the dollar in December, the real had strengthened to near one-year highs as of this month.

Any mechanism that weakens the real is beneficial to Brazilian farmers, who price their grain sales in dollars. A weaker real may elevate Brazilian farmer selling, possibly increasing export offerings.

If the weakness is prolonged, it could potentially impact planting decisions for upcoming seasons as Brazilian farmers would push for the huge corn and soy crops needed to meet demand.

That could also encourage the further expansion of farmland in Brazil, cutting even deeper into the United States’ global grain footprint, which has already shrunk notably over the last couple of decades.

Karen Braun is a market analyst for Reuters. Views expressed above are her own.

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U.S. corn export sales, July 3

U.S. unroasted coffee imports by supplier 2024