Mexico Makes Largest U.S. Corn Purchase in Decades

By CnAgri2012-08-06 19:14:20 Print

Mexico raided the U.S. corn market by making the biggest one-day purchase in over two decades last week, the first clear sign of global anxiety over the decimated U.S. crop. According to Reuters, Mexico, the second largest importer of U.S. corn after Japan, bought 1.516 million tonnes. A move traders said the news could could touch off a frenzy of buying by other countries who have been caught flatfooted by the worst U.S. drought in 56 years.

The deal comes at a time when global consumers are on high alert for a repeat of the 2008 buying spree that many blame for exacerbating the surge in food costs.

Mexico is particularly sensitive about corn. It is used there to make tortillas, a food staple, the price of which has already risen nearly 18 percent since January, according to Mexico's economy ministry. Riots broke out over surging tortilla prices in 2008.

While Mexican importers have regularly made large one-day purchases around this time of year, this week's deal was twice as large as recent buys, traders said. In fact, it was the biggest ever by Mexico and the largest by any country since the Soviet Union bought 3.72 million tonnes in January 1991.

About two-thirds of the 1.5-million-tonne purchase will be corn that is harvested this autumn, a crop that has shrunk by more than a quarter since initial estimates early this year.

Officials say Mexico is already low on supplies after suffering its own devastating drought in 2011, sending the price of meat and domestic food staples higher.