CHICAGO (Reuters)— Mexico’s steady buying has helped U.S. corn export sales outpace last year, offsetting sluggish early-season purchases by traditional Asian customers like South Korea and Japan.
Now, Mexico is primed to overtake Japan as the single largest U.S. corn importer, knocking Tokyo from the perch it has occupied since the mid-1980s and taking the top spot for the first time ever.
The shift illustrates how the United States, once the world’s lone grain trading superpower, is now relying on its southern neighbour to absorb more of its ever-growing corn production, analysts said, as rising suppliers like Ukraine and Brazil disrupt grain trade flows.
At risk is the long-standing dominance of U.S. corn exports, valued at $8.3 billion last year and a crucial outlet for about a third of every U.S. corn crop.
“There’s been a shuffling of the top of the deck,” said Dan Basse, president of Chicago-based consultancy AgResource Co. “It’s a very competitive world out there.”
The change in export patterns highlights how quickly the fortunes in the farm economy can turn, and how little time companies have to respond, said traders.
Despite a three-month buying flurry, Japan remains on pace to buy its second-smallest U.S. corn volume since at least 1999, according to USDA data. South Korea’s haul through mid-June is the second-lowest in a decade.
That Asian demand could stall as the U.S. dollar has rallied to a three-month high against a basket of currencies after Britain’s vote last week to split from the European Union, making dollar-denominated commodities costlier for those holding other currencies.
Meanwhile, Brazilian and Argentine corn prices are easing as their late-season harvests accelerate.
“Buyers respond to price. If you’re not able to offer grain cheaper than the next guy, you’re not going to get that business,” said a U.S. exporter who asked not to be named.
When Asian buyers started shunning U.S. corn last fall, some of the largest American grain exporters and sellers scouted markets closer to home to offset the losses, said traders.
In particular, they turned to markets that industry-funded groups, such as the U.S. Grains Council, had been wooing for years and regularly hosted at U.S. grain elevators and farms.
Mexico, traders said, was an obvious place to pitch due to proximity and favourable trade status. For Colombia and Peru, free trade agreements also made buying corn from Brazil and Argentina less appealing than American grain.