In rare move, Argentine corn heads to United States
The first shipment of Argentine corn to the United States this year is on its way with more to follow, marking an increase in orders from the South American country to the world's top corn producer as it recovers from drought, traders said on Tuesday.
The United States usually imports small amounts of the grain each year, mostly from Canada. Cargos from faraway Argentina are rare. It sent less than 72,000 tonnes of corn to the United States in 2012, about the amount than can fit in one large ship.
In the two years before that, Argentina sent no corn to the United States, according to the agriculture ministry.
Last year's U.S. drought slashed U.S. supplies and kept corn prices historically high this season. Buyers are looking for affordable alternatives and Argentine corn is relatively cheap.
"One vessel is heading to the United States from here and I know of a couple of trades that have been done," said a Buenos Aires-based industry source who asked not to be identified.
The cargo is the first to go from Argentine to the United States this year, the source added.
"The United States lost one third of its corn production, so there's a black hole there," he told Reuters, adding that Mexico is also a favored destination for Argentine corn these days due to thin U.S. supply.
Mexico typically buys more than 90 percent of its imported corn from its northern neighbor.
The United States last year had its worst drought in more than a half century, tightening global grain stocks and raising fears of a world food crisis should the extreme weather suffered in producing countries over recent years continue.
Benchmark Chicago corn futures have risen about 13 percent since January because of drought-reduced U.S. supplies, making Argentine corn a relatively attractive alternative.
In Argentina the average spot price for corn at the country's ports was $276 per tonne free-on-board (FOB) on Tuesday. U.S. corn at the Gulf Coast was offered at about $315 per tonne FOB.
One U.S.-based grains trader said there were up to eight Argentine corn cargoes on the books for shipment to Mobile, Alabama, but another said that those purchases had been canceled and that most Argentine corn imports this year would enter the country by way of East Coast ports.
Argentina - the world's No. 3 corn supplier - expects a 2012/13 harvest of 25.7 million tonnes compared with a drought-stricken 21.2 million tonnes in the 2011/12 crop year, according to official forecasts.
More than 14 percent of 2012/13 corn has been gathered to date and the bulk of the crop will be harvested in April, according to the Buenos Aires Grains Exchange.
The season got off to a soggy start when strong rains lashed Argentina's fertile Pampas plains, delaying planting, but sunshine finally prevailed, setting the stage for what is expected to be a record crop.