If trade has fallen into disrepute this US election season, no one bothered to tell the grain market.
Ships laden with millions of tonnes of US-grown wheat, corn and soyabeans have been leaving ports for destinations across the globe. Soyabean exports have been heavy enough to propel economic growth in the third quarter.
For US farmers it is a welcome change from year ago, when the effects of a strong dollar and ample supplies elsewhere trapped some crops inside the country. Since the US consistently grows more food than it needs, exports are a crucial outlet.
“You have to sell it or smell it,” says Gregg Doud, president of the Commodity Markets Council, a Washington-based industry group whose members include agricultural merchants such as Archer Daniels Midland, Bunge and Cargill. “If we can’t move it out of this country it stays at home and lowers prices.”
US export sales of corn are up 91 per cent from the previous crop year, while sales of soyabeans and wheat are both 26 per cent higher, according data to the US Department of Agriculture.
The department anticipates that for the full marketing year, which ends before the 2017 harvest, US soyabean exports will be the most ever and corn exports the highest in nine years. Supplying the shipments will be record harvests of corn and soyabeans this autumn and silos packed to the roof.
The scale of the export push was reflected in third-quarter results announced this week by ADM and Bunge. The former is the most US-centric of the big grain handlers, with constellations of “elevators” (commercial silo complexes) across states such as Illinois in the heart of the US corn belt and Kansas in the main hard winter wheat region. Quarterly operating profit from its agricultural services division, which trades grain, rose 30 per cent on year to $193m as US exports soared.
Juan Luciano, ADM chief executive, told analysts his company exported record volumes. He believes “the US will be very full in the pipeline and will be exporting corn and soybeans well into [the first quarter of] next year”.
Bunge, by contrast, has a large footprint in Brazil, whose corn crop was curtailed by dry weather earlier this year. In the US Bunge’s silos are concentrated in the Mississippi river delta region, where the crops are smaller and the competition is intense, says Soren Schroder, chief executive.
Bunge on Wednesday reported its agribusiness volumes fell in the third quarter, while the division’s operating profit plunged 74 per cent to $83m. “This year is the year where the US really has a clear shot at global exports, because Brazil in reality is out,” Mr Schroder says.
Despite their differences, shares of ADM and Bunge have this week jumped by 8.4 per cent and 11.5 per cent, respectively, as both companies issued positive outlooks for the coming months.
The exports come at an ugly time for US agriculture. Grain prices are depressed and farm income is the lowest since the global financial crisis.
They also come as the idea of free trade faces hostility not seen for years in a US presidential campaign. Both Donald Trump and Hillary Clinton, the Republican and Democratic nominees, oppose the Trans-Pacific Partnership, a proposed trade deal that would end barriers for US agricultural commodities including beef, pork, soyabeans and cotton, according to the American Farm Bureau Federation. Mr Trump has proposed punitive tariffs on China and Mexico, respectively the top-ranked foreign destinations for US soyabeans and corn.
Iowa, which grows more corn and soyabeans than any other state, is leaning towards electing Mr Trump, according to polling data from Real Clear Politics. The midwestern state has 130,000 farm operators, according to the latest US census of agriculture, but more than 2m registered voters.
The Farm Bureau, an agricultural lobby group, backs free trade measures, estimating the TPP would increase net farm incomes by $4.4bn.
“It’s a tough time in farm country. So any additional sales people can get are a great thing,” said Will Rodger, a bureau spokesman.
“One thing that is certain is that trade for the US agricultural sector has been, without exception, positive. If you look at any sector in United States farming it’s hard to find one that is going to worse under conditions of free trade,” he added.
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