CHICAGO (Reuters) – Importers are buying U.S. corn at the fastest pace since the mid-1990s, according to U.S. government data, as tightening stocks in Latin America prompt a rush to purchase cargoes of the grain from animal feeders worldwide.
A deepening drought in Argentina and limited corn supplies in Brazil, two of the three largest exporters, have opened a window of opportunity for top supplier the United States, which has the largest available surplus for export.
The shopping spree comes as a rare bit of good news for U.S. shippers and farmers who have seen incomes fall amid years of global oversupply and intensifying competition. The unexpected surge in sales could help draw down record-large U.S. corn supplies.
The high volume of sales means that exporters will need to physically load corn export shipments at a record pace to keep up with the orders. If they fail to do that, actual exports may fall short of government forecasts.
“Given the high (export sales) commitments, the U.S. is going to have to go gangbusters on corn shipments during the second half of the year to reach USDA’s projection,” said Terry Reilly, senior commodities analyst with Futures International.
U.S. corn exporters sold more than 2.5 million tonnes of the grain last week for shipment in the season ending Aug. 31, the strongest weekly sales for a single marketing year in 23 years, according to U.S. Department of Agriculture (USDA) data issued on Thursday.
Over nine brisk weeks, sales have averaged an unprecedented 1.8 million tonnes a week.
The U.S. export dominance is expected to continue into the summer amid limited competition from other major exporters.
With 25 weeks left in the current 2017/18 marketing year, exporters will need to move a average of around 1.45 million tonnes per week to meet the USDA’s full-season forecast.
The previous record for weekly shipments from mid-March to the end of August was about 1.2 million tonnes, set in 2016, according to USDA data.
If U.S. grain suppliers fail to load shipments at the record rate, some sales may be rolled into the next crop year or canceled altogether.
Several South Korean importers have recently booked corn purchases on an “optional origin” basis, meaning that shipment could come from the United States or South America. If grain from South America becomes cheaper again, buyers could cancel some of the U.S. purchases.
Brazilian export offers are scarce until August, when the country’s large second corn crop is harvested. Tight near term supplies have prompted chicken processor JBS SA to import Argentine corn.
Argentine corn offers are currently at least $3.50 per tonne above U.S. Gulf prices of around $188.50 per tonne, according to Thomson Reuters data, and offers in No. 4 exporter Ukraine are $17.50 higher.