August 3, 2012

 

 

For delivery in the next two marketing years, private exporters reported the sale of 1.516 million tonnes of US corn to Mexico.

 

It was the biggest single-day sale of US corn in more than 20 years, since the Soviet Union bought 3.72 million tonnes in January 1991.

 

The Mexico sale, for a total of 1,516,380 tonnes, included 982,980 tonnes for delivery in 2012-13 and for 533,400 tonnes for 2013-14. The corn marketing year opens each September 1.

 

Mexico, which suffered a devastating drought in 2011, is the No. two buyer of US corn after Japan. Some US analysts were surprised by the size of the Mexico sale and the early purchase of 2013-14 corn, ahead of even the 2012 US corn harvest.

 

But they noted that Chicago Board of Trade (CBOT) corn futures for December 2013 delivery, which represent the 2013 harvest, were trading near US$6.30 per bushel -- a significant discount to December 2012 futures, which were trading near US$7.90.

 

CBOT front-month corn set an all-time high of US$8.28-3/4 last month as drought cut yield prospects for the 2012 US corn crop.

 

"If you're an end-user and you just got clobbered and bought US$8 corn, then US$6.30 corn looks like a really good deal," said Jim McCormick of Allendale Inc in McHenry, Illinois.

 

Large purchases by Mexico of US corn are not unprecedented. The USDA announced an 822,900-tonne US corn sale to Mexico on June 7, 2011, and an almost identical volume on October 7, 2010.

 

"It happens pretty much every year around this time, a big rail programme that gets put together," a US corn exporter said.

 

By law, exporters must report promptly the sale of 100,000 tonnes or more of a commodity to the same destination in a day. Sales of smaller amounts are reported on a weekly basis.