October 25, 2012

 

Mexico purchases non-US corn worth 270,000 tonnes

 

 

USDA announces on Tuesday (Oct.23) that Mexico's 270,000-tonne purchase of non-US corn may signal the start of a trend away from its traditional near-total dependence on American producers.

 

Severe drought in the US, the world's top corn exporter, has decimated crops, tightened global supplies and pushed long-standing trade partners like Mexico to seek out other sources of supply.

 

"The US is not selling corn, (it's) importing it, and that is so rare," said Jason Ward, a Minneapolis-based analyst with Northstar Commodity.

 

Mexican corn imports totalled 7.82 million tonnes in 2011, nearly 99% of which came from the US, according to Mexico's national statistics agency.

 

The bulk of Mexico's corn imports comprise yellow corn for animal feed, rather than white corn which is used for human consumption, including the country's staple tortillas. Mexico is historically self-sufficient in white corn.

 

Traders believe the non-US purchase announced on Tuesday was yellow corn, but the USDA did not specify. Top policy makers say Mexico should diversify its corn suppliers.

 

"There is interest from several (Mexican) corn buyers to make their purchases from Brazil or Argentina," Francisco Mayorga, Mexico's agriculture minister, said late last week.

 

He said that South American corn could help ease Mexico's supply worries, and added that some white corn is currently being used to feed livestock.

 

"If they are diverting white corn to feed, that seems like short supply concern to me," said Ward. "That does not seem like something you would do if you did not have to."

 

Mexico's food safety agency SENASICA gave the green light to corn imports from Brazil, the world's fourth biggest exporter, about two months ago. The agency expects to approve safety protocols for corn imports from Argentina by mid-2013.

 

US law requires private exporters to report the sale of 100,000 tonnes or more of a commodity within 24-hours of the purchase. The USDA said the private exporter had advised that the corn was from outside the US.

 

"It's a big deal because of where it comes from, not the size," said a corn trader who asked to remain anonymous, in line with company policy.

 

US corn exports have slid three years in a row. The country's current crop is down 42% compared with peak shipments of 1.98 billion bushels reached in 2009, or nearly 50 million tonnes.

 

Ward said it was in Mexico's best interest to purchase corn from Argentina, the world's second biggest exporter, given available supply and cheaper prices.

 

"And the sooner the better," he added, given competition from buyers in the US as well as Asian markets like Japan and China.