Bickering costs US its grip on ‘vital’ grain trade

As one door opens, another –"vital" – one closes.

America’s growing exports of corn to China spark regular excitement in Chicago’s futures market, and lured Bunge into introducing crop handling curbs which have sparked a legal battle with seeds giant Syngenta.

But the US has, in the meantime, lost its stranglehold on a corn import market – Colombia’s – which, in 2011-12 is expected, at 3.7m tonnes, to be nearly twice as big as China’s.

America’s share of Colombian corn imports slumped from 96% in 2007 to 19.4% last year.

And now the US is in danger of losing top rank in wheat supplies too.

‘Stiff competition’

The shifts reflect improved grain harvests in other South American countries following weather setbacks and, for Argentine wheat, government export curbs which prompted farmers to grow other crops.

But this is only part of the reason why Argentina has taken America’s place as the dominant corn exporter to Colombia, with shipments soaring from 99,000 tonnes to 2.21m tonnes between 2007 and last year.

The Mercosur trade agreement has introduced a 60% duty preference on corn imports from other countries in the South American trade zone from the US.

And a free trade agreement between the US and Colombia which would level the playing field, and which has been in the works for years, remains victim to the heightened tensions between Barack Obama, America’s Democrat president, and Republican politicians.

"Because the US has not ratified the agreement, US corn, which is taxed at 15% duty, faces stiff competition from Brazilian and Argentine corn, with a duty of 6.7%," Kurt Shultz, Latin America director of the US Grains Council, an export promotion group, said.

‘Vital market’

And, since August 15, the US faces tougher rivalry from Canada too – after a free trade agreement between Bogota and Ontario came into effect.

Trade sources said that Colombian buyers "placed orders for 125,000 tonnes of Canadian feed wheat in the 10 days since the agreement went into effect".

These imports, an alternative to livestock feeders seeking an alternative to high-priced corn, "will further erode US corn sales opportunities in this vital corn market", the council added.

Furthermore, Canada is ousting the US from milling wheat orders too.

Nutresa, Colombia’s main biscuit and pasta producer, responsible for about half the country’s wheat imports, has said it is to source grain from Canada because of more favourable trade tariffs.

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