June 16, 2008

Mexico's grain trading slumps as US prices soar

Physical trading came close to a halt this week in the Mexican cash grains markets as US prices for imported grains rose to levels that put local buying to a stop, traders and importers said Friday (June 16, 2008). 

Only in the market for locally produced white corn from the 2007-08 fall-winter harvest in Sinaloa was some limited trading reported, but even local corn producers and traders were watching the US market for any spillover effect.

"There has been some yellow corn coming in from the US, but that's corn bought a while back. There is no business at the moment with the prices where they are; people are just not buying," said a local physicals trader. 

Widespread flooding across the key grains belt in the US Midwest have led corn prices to rally to new highs this week, and amid the growing concern over the world food crisis, the flooding added to market supply concerns.

The Sinaloa harvest, meanwhile, continued to be coming out well, one month after the physical harvesting started in Mexico's important-most commercial grains state, and with the supply flow now approaching its peak.

"So far the crop is coming out well, the harvest is starting to reach the markets and now we are just waiting for more news about the Tamaulipas sorghum crop before we can evaluate the local situation," said the first trader.

Corn and wheat futures closed higher Friday at the Chicago Board of Trade, with active July corn up 22 3/4 cents at US$7.31 3/4 cents a bushel, and July wheat settling 31 cents stronger at US$8.82 a bushel.

Soy also closed the week higher, with active July soy ending up 23 cents at US$15.60 a bushel and July soymeal US$13.30 higher at US$451.50 a short tonne.