As Brazil struggles to harvest higher yields, Brazil farmer and U.S. marketing broker Matthew Kruse says additional corn acres will not make up for increased domestic demand and exports from that country will drop.

That’s good news for U.S. corn prices.

“We did see Brazil kind of overtake the United States as the number one corn exporting country in the world, and now that's going to flip flop back,” Kruse says. “Exports here in the United States have been running hot, and it's kind of been helping support the CBOT prices.”

This is the period when Brazil’s corn exports traditionally run up, but that’s not happening.

“This year a lot more of Brazil's corn is being consumed domestically,” Kruse says. “A large part of that is due to a lot of the corn ethanol boom that you're seeing there right now.”

Ethanol plants in Brazil are growing faster than farmers can feed them.

“So, I think you're going to continue to see [ethanol plants] consume more of Brazil's corn production, leaving less for eventual exports from Brazil,” Kruse says.

Kruse sees the U.S. holding on to its leading corn export position, with Argentina likely being the second largest exporter and Brazil falling to third largest.

Who is right? CONAB or USDA?

Muddying the picture is ever increasing dissonance between export numbers for Brazil. CONAB reports 36 million metric tons. USDA forecasts 44.1 MMT.

Related:Dear USDA: Why?

“And neither one is probably right,” Kruse says. “I think CONAB is maybe a little bit understated, and maybe USDA is a little overstated.”

Yet the gap isn’t closing.

Pre-season estimates are 15 MMT apart.

“It's wide enough you could drive a truck through that,” Kruse says. “Something's got to give. I think the export forecast from Brazil has probably got to increase, and USDA is probably overstating it, like they tend to do.”

Kruse also sees corn acres dropping in Brazil.

“Corn acres in Brazil have been trending higher, but they're probably going to drop from 55 million acres last year to 52 million acres this year,” Kruse says.

Though Brazil has been closing the corn acreage gap with the U.S., American corn farmers maintain their production lead by harvesting higher yields.

“We continue to see the main advantage in productivity where, you know, we're expecting record yields, 183 bushels per acre, and it's like half that in Brazil overall,” Kruse says. “And so, our productivity is still, by and far, quite a bit larger than what we're seeing in Brazil right now.”