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U.S. corn buyers are looking to Brazil for supplies as domestic prices continue to rise and supplies remain low due to the ongoing drought, according to reports by the Financial Times. The livestock, poultry and ethanol industries have been particularly challenged, as 88 percent of the U.S. corn crop sits in drought-hit regions.
“This is not something that happens — a boatload of corn coming in for use in U.S. feeding operations," said Erick Erickson, director of global strategies at the U.S. Grains Council. "This is an unusual thing.” According to port records, 2008 was the last year foreign bulk corn arrived on the U.S. mainland, and it was in the form of seeds. Traders say meat companies along the U.S. east coast can purchase Brazilian corn at a $12-per-metric-ton discount to U.S. corn. Chicago corn futures reached a record $8.24½ per bushel on July 20, or $324 per metric ton.
While the U.S. is still expected to supply 40 percent of the corn traded on the world market, Brazil has been enjoying a bumper crop and is competitively pricing its goods. According to the U.S. Department of Agriculture, Brazil will export 14 million metric tons of its record 70 million metric ton harvest. “The U.S. produces almost six times more corn than Brazil, but the U.S. has already used up a lot of its land and if Brazil can offer a good price…and we can improve our logistical problems, I think we can become a big exporter, including to the U.S.,” said Alysson Paolinelli, head of Brazil's national association of corn producers.
Forecast for this year also indicates gains in worldwide soybean production
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