August 15, 2014
The US is on track to capture more than 95% of Colombia's 3.6 million-tonne corn market this marketing year, which ends August 31, a dramatic turn-around from 2013's exports of just 644,000 tonnes to the country.
Colombia has traditionally been the biggest importer of US corn in South America. However, due to tariff advantages, Colombian importers began switching to Argentina and Brazil to source their corn needs around 2009. It wasn't until the US-Colombia free trade agreement (FTA) was implemented in 2012 that US exporters began to become competitive again in this vital corn market.
The FTA agreement allows 2.3 million tonnes (90 million bushels) of US corn to be imported duty-free. The duty-free quota for this year was filled in June, after which market watchers expected Colombian importers to switch back to South American origin as the Argentine crop began to be exported.
However, this did not happen. The low international price of corn has caused Colombia to raise its duties on other origins to more than 30%, compared to 18% on corn from the United States. As a result, Colombian grain importers returned aggressively to buying US corn.
"This year, Colombian importers were able to save millions of dollars in taxes by importing US corn, said USGC Director of Global Strategies Kurt Shultz.
In addition to corn, the Council is working with the livestock industry in Colombia to introduce DDGS, which face no import duties, into that market.
Source: US Grain Council