August 13, 2007

 

Mexico cash grains: White, yellow corn trade in quiet market

 

 

Physical trading was quiet last week in the Mexican cash grains market, but some white and yellow corn business was reported despite the slow summer mood, traders and importers said Friday (August 140).

 

As 2006/07 fall-winter white corn harvest in the key northern grains state of Sinaloa enters its final weeks, the state is still on track to produce a new record of close to 5.0 million tonnes, traders said.

 

"The harvest is pretty much over, it's only the last few regions that are now wrapping up the harvest," said one trader in Sinaloa. "The crop is looking good, and the warehouses in Sinaloa are bursting with fresh supply."

 

But despite ample supplies, active physical trading was absent as traders said buyers were eyeing lower prices because of the current healthy supply. Producers, however, have refused to lower their prices further.

 

Some traders were speculating that the government soon would release above-quota import coupons for US yellow corn for the second half of the year, in part to pressure producers to lower prices for white corn, which primarily is used for the production of tortillas, a key Mexican staple.

 

But they also said as the market is moves closer to the full opening of the agriculture market under the North American Free Trade Agreement on Jan. 1, the Mexican government is trying to build healthy stocks to guarantee a smooth transition process.

 

Although at least 70 percent of Sinaloa's white corn harvest traditionally is used by industrial manufacturers of tortillas, the remainder of the crop is sold for use as animal feed and competes with the cheaper imported yellow corn.

 

Trade in most other Mexican grains market for both local and imported wheat, sorghum and soy products, meanwhile, remained quiet with no or little new business reported amid continued high prices.

 

Corn and wheat futures were trading lower at mid-session Friday at the Chicago Board of Trade. The active September corn contract was down 3/4 cent at US$3.31 1/2 per bushel, while September wheat 4 cents lower at US$6.69 1/2 per bushel.

 

Soy products also traded lower Friday, with active August soybeans 8 cents lower at US$8.50 a bushel, and August soymeal futures down US$1.80 at US$230.520 per short tonne.