Key Takeaways
- • US trade deficit surged to $77.6 billion in May (versus $54.6 billion in April), with goods deficit expanding to $106.5 billion as exports fell and imports increased, creating near-term GDP headwinds despite services surplus of $28.9 billion offsetting weakness.
- • US corn export pace accelerates amid supply tightness: May official exports totaled 286 million bushels; June estimates reach 285 million bushels, with outstanding sales of 621 million bushels as of June 25 (versus 468 million year-ago), signaling potential old-crop US corn exports reaching 3,400 million bushels and end stocks falling to or below 2.0 billion bushels.
- • US ethanol exports jumped 11% year-over-year to 190 million gallons in May, with January-May shipments totaling a record 1.0 billion gallons (up 12% YoY), driven by large Canadian and European buyers and steep French corn production losses, supporting sustained ethanol corn demand of approximately 5,600 million bushels in crop year 26/27.
- • Brazil's safrinha corn harvest 50% complete by mid-week with Mato Grosso cash corn quoted at $131/MT ($3.32/bu), positioning for typical post-harvest market recovery in August as harvest pressure fades and domestic ethanol plants and importers compete for available supply.
- • Tariff policy continues reducing China's share of US goods deficit: China's seasonally adjusted goods deficit narrowed to $14.5 billion in May, smaller than deficits with Vietnam, Mexico, and Taiwan, confirming tariff effectiveness in rebalancing trade imbalance beyond historical China concentration.
Summary
The US trade deficit widened sharply in May 2026, expanding to $77.6 billion from $54.6 billion in April, driven by falling exports and rising imports across key categories. The goods deficit alone reached $106.5 billion, partially offset by a $28.9 billion services surplus. Imports of pharmaceuticals, automobiles, crude oil, computer accessories, and semiconductors remained elevated, reflecting sustained domestic demand and continued strength in AI and capital equipment supply chains. Economists flagged the larger deficit as a near-term drag on GDP growth. Notably, China's contribution to the monthly goods imbalance has diminished significantly, with the seasonally adjusted China deficit measuring $14.5 billion in May—smaller than bilateral deficits with Vietnam, Mexico, and Taiwan—validating the effectiveness of recent tariff policies in rebalancing trade flows away from historical China concentration.
The US corn market faces tightening supply dynamics driven by robust export demand and strong ethanol consumption. Official May corn exports totaled 286 million bushels, with June estimates reaching 285 million bushels according to FGIS inspection data. Outstanding export sales as of June 25 climbed to 621 million bushels, significantly above the 468 million bushels recorded the same week a year prior. Meeting USDA's current export target requires July and August shipments to average 260 million bushels monthly; failure to achieve seasonal demand slowing could push old-crop US corn exports to 3,400 million bushels and compress final end stocks to or below 2.0 billion bushels.
US ethanol export momentum has accelerated notably, with May shipments reaching 190 million gallons (up from 172 million in April and 185 million in May 2025). January-May year-to-date ethanol exports totaled a record 1.0 billion gallons, representing 12% growth versus the prior-year period. Canada and Europe remain the primary buyers, with European demand particularly elevated due to steep corn production losses in France. January-May 2024 ethanol exports had routinely ranged only 130-160 million gallons monthly, underscoring the structural shift in export demand. This robust ethanol export activity carries forward into the 2026-27 crop year, where ARC projects corn grinding to reach 5,600 million bushels, supported by reduced US sorghum surplus availability and sustained large-scale ethanol exports.
Meanwhile, Brazilian safrinha corn harvest approached 50% completion by mid-week, with Mato Grosso cash corn trading at $131/MT ($3.32 per bushel). Historical price patterns suggest bottom formation typically occurs in Mato Grosso by mid-July as harvest pressure subsides and domestic ethanol plants and importers increase competitive bidding for available supply. A normal post-harvest recovery in Brazil's cash corn market is anticipated to commence in August. The convergence of US export acceleration, strong ethanol demand, and Brazilian harvest dynamics creates a complex backdrop for corn market fundamentals heading into the traditionally volatile late-summer period.
The US corn market faces tightening supply dynamics driven by robust export demand and strong ethanol consumption. Official May corn exports totaled 286 million bushels, with June estimates reaching 285 million bushels according to FGIS inspection data. Outstanding export sales as of June 25 climbed to 621 million bushels, significantly above the 468 million bushels recorded the same week a year prior. Meeting USDA's current export target requires July and August shipments to average 260 million bushels monthly; failure to achieve seasonal demand slowing could push old-crop US corn exports to 3,400 million bushels and compress final end stocks to or below 2.0 billion bushels.
US ethanol export momentum has accelerated notably, with May shipments reaching 190 million gallons (up from 172 million in April and 185 million in May 2025). January-May year-to-date ethanol exports totaled a record 1.0 billion gallons, representing 12% growth versus the prior-year period. Canada and Europe remain the primary buyers, with European demand particularly elevated due to steep corn production losses in France. January-May 2024 ethanol exports had routinely ranged only 130-160 million gallons monthly, underscoring the structural shift in export demand. This robust ethanol export activity carries forward into the 2026-27 crop year, where ARC projects corn grinding to reach 5,600 million bushels, supported by reduced US sorghum surplus availability and sustained large-scale ethanol exports.
Meanwhile, Brazilian safrinha corn harvest approached 50% completion by mid-week, with Mato Grosso cash corn trading at $131/MT ($3.32 per bushel). Historical price patterns suggest bottom formation typically occurs in Mato Grosso by mid-July as harvest pressure subsides and domestic ethanol plants and importers increase competitive bidding for available supply. A normal post-harvest recovery in Brazil's cash corn market is anticipated to commence in August. The convergence of US export acceleration, strong ethanol demand, and Brazilian harvest dynamics creates a complex backdrop for corn market fundamentals heading into the traditionally volatile late-summer period.
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