August 15, 2011

 

Mexico's corn imports seen to hit record level

 

 

The corn output of Mexico, the world's second-biggest corn buyer, will fall short of previous estimates, forcing the country to increase purchases from foreign suppliers by 36%, the highest record by far, the National Confederation of Farmers said.

 

The outlook for local corn output this year was cut to 22 million tonnes, from a previous estimate of 25.1 million tonnes, Hector Salazar, secretary general of the Mexico City-based group, said. The drop may force Mexico to import a record 12.1 million tonnes of yellow corn, up from 8.9 million tonnes last year, he said.

 

Corn futures have surged 69% in the past year, fuelled by supply concerns in the US and other producing nations. Crops in Mexico, where the grain is a staple in products from tortillas to hot drinks, was cut by about 4.5 million tonnes after frost last winter in the northern region, according to the Agriculture Ministry.

 

"If Mexican imports reach those levels, it would put additional upside pressure on prices," said Marty Foreman, an economist for Doane Advisory Services Co. in St. Louis, Missouri. "Markets were expecting an increase of imports of one million or 1 1/2 million tonnes."

 

Of the 12.1 million tonnes of yellow corn that Mexico may import this year, about 75% will be used to feed animals, Salazar said. The rest is mostly for industrial consumption, he said. Mexico usually imports between eight million and nine million tonnes of yellow corn a year.

 

Corn futures for December delivery rose 0.1% to close at US$7.1425 a bushel on the CBOT. The price rose 1.6% for the week, the second straight gain, after the US government said that output will rise less than expected this year because of hot weather in July.

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