August 4, 2006

 

US assures Asia it has enough corn exports

 

 

The United States would continue to supply enough corn to Asian buyers even as demand from the ethanol industry surges, a US Grains Council official said.

 

Ethanol demand is not going to cut off US exports to the region, said Adel Yusupov, international operations manager at US Grains Council.

 

Several countries in Asia such as Japan, South Korea, Taiwan, Vietnam and Indonesia depend heavily on US corn for food and feed use. Concerns have been raised now that ethanol would be using up a significant chunk of corn output.

 

Asian countries are concerned that demand is rising in such a way that corn prices could well touch US$3-US$4/bushel over the next few years, from the current farmgate price of around US$2-US$2.10/bushel.

 

Speaking on the sidelines of an industry gathering in Hanoi, Yusupov said such fears are caused by a lack of understanding of the US corn industry.

 

While ethanol production is using up a lot of corn produced in the US, increasing adoption of GM corn varieties leading to a general rise in yields are boosting output as well, Yusupov said. He also added that the US is expected to have its second-highest corn yield this year.

 

US corn yield have more than doubled to around 9.41 tonnes/hectare now from just 4 tons/hectare in 1980, Yusupov pointed out, thanks to GM crops.

 

Around 61 percent of US corn now comes from GM varieties, compared with around 25 percent just 5 years ago. 

 

Domestic corn yield is expected to touch 10.15 tonnes/hectare by 2010, according to the US Grains Council.

 

Moreover, DDGS (distillers dried grains with solubles) a byproduct from ethanol production, can be blended with feed to serve as a corn substitute, thus freeing up more corn for exports, Yusupov explained.

 

According to the US Grains Council estimates, DDGS would displace more than 25 million tonnes of feed corn in 2010.

 

Moreover, US corn farmers may expand the current 33 million hectares under corn cultivation by around 6-10 percent in the next 2-3 years. Various conservation programmes currently underway have the potential to increase corn acreage, he said.

 

Farmers would also convert more land from other crops to grow corn if there is money to be made there, he said.

 

Yusupov said the absence of China's corn from international markets and Argentina's lower corn supplies have made it a good year for US corn. Even as overall demand remained unchanged for the year, US market share in the global corn trade rose to 70 percent in 2006 from 60 percent in 2005, he noted.

 

Furthermore, the US is now opening up corn markets, such as Indonesia, Vietnam and China. While China has so far imported only 50,000 tonnes of corn from the US this year, it may yet turn into a potentially big market for US corn, Yusupov noted.

 

Meanwhile, US corn exports to the Philippines are still hampered by a high import duty of 50 percent, he noted.