Mexico hikes corn orders as drought maintains grip

26.07.2013

Mexico was revealed to have bought a further 100,000 tonnes of US corn, taking advance orders for 2013-14 well above year-ago levels, amid a warning over the impact of long-standing drought on the domestic harvest.

Mexico purchased more than 110,000 tonnes of US corn in the week to last Tuesday, most for 2013-14 delivery, making them the top acquirer for the period, according to the US Department of Agriculture.

The figure, which excludes a further 106,000-tonne order revealed on Tuesday by a daily alerts system, took to 1.65m tonnes Mexico's orders for next season – 51% more than the country had ordered in advance as of mid-July last year.

Most other countries, with the notable exception of China, have trimmed advance orders in expectation of abundant supplies and lower prices ahead, assuming expectations of a record US harvest hold true.

However, Mexico's needs are being whetted by a dearth of rainfall which has hurt prospects for domestic production of both corn and rival feed grain sorghum.

Import needs

The USDA's Mexico City bureau in a report published overnight estimated Mexican corn imports in 2013-14 at 7.6m tonnes, 1.1m tonnes higher than the department's official forecast.

The figure - sufficient to promote the country about China and the European Union to third rank among world corn importer next season, behind Japan and South Korea - reflected lower hopes for the domestic harvest, downgraded to 21.9m tonnes, below an official USDA number of 23.0m tonnes.

Mexican government sources highlighted the prospect of a fall in sowings "due to the low water levels" in reservoirs, including those in the top corn-growing state of Sinaloa, which are full to only 10.2% of capacity.

"Official sources noted that unless north west Mexico has a good hurricane season in 2013, which will allow replenishment of the water reservoirs, it is very likely that corn area planted in the upcoming 2013-14 fall-winter cycle will be at least 20% below the average planted area," the bureau said.

'Extreme heat and drought'

Furthermore, users are being attracted to corn because of the potential for lower prices compared with sorghum, for which Mexico's 2012-13 harvest appears to have dropped to 5.85m tonnes, more than 1.0m tonnes lower than had been expected.

"This drop in production is attributed to lower yields from continued extreme heat and drought conditions, especially in the state Tamaulipas," a major producing state, the bureau said.

In Tamaulipas, in Mexico's north east, yields in some municipalities looked like falling to 1.0 tonnes per hectare or below, from the 50% of land that had not been abandoned.

"A private source stated 'this year we had the worst agricultural crop cycle in history and have never felt a drought as strong as this and are now to the point of losing almost 60% of the sown area'."

The bureau, while lowering its estimate for sorghum consumption in 2012-13 and 2013-14, forecast a 75% jump in Mexico's sorghum imports next season to 3.50m tonnes.


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