Mexico inks record U.S. corn purchase after Mexican farmers warn of crop shortfall

CHICAGO (Reuters) - Mexican grains buyers booked deals to buy their largest volume of corn from the United States since last December, the U.S. Agriculture Department said Thursday, a development that could point to growing import demand from its southern neighbor.

FILE PHOTO: Corn pictured on a farm in Roachdale, Indiana, U.S. October 29, 2019. REUTERS/Bryan Woolston/File Photo

The sale for 1.433 million tonnes of U.S. corn occurred after Mexico’s most productive farmers warned they may not be able to meet demand with domestic supplies after deep government spending cuts.

USDA said that 891,540 tonnes of corn was booked for delivery in the current 2020/21 marketing year that ends in August, with the balance scheduled to be shipped in 2021/22.

The so-called flash corn sale was the biggest to Mexico since Dec. 12, 2019, when 1.6 million tonnes were announced.

The sale came as corn prices hover around their highest since August 2019 and China discusses importing millions of additional tonnes of corn over the next year.

Mexico typically books a massive purchase of U.S. yellow corn, used mostly by its big livestock industry, during the fall when supplies are abundant as farmers are harvesting.

Under Mexican President Andres Manuel Lopez Obrador, the agriculture ministry’s budget has been cut by a third, with subsidies previously provided to larger farmers, who account for two-thirds of the country’s domestic corn production, almost entirely eliminated.

Mexico has historically been self-sufficient in white corn, used mostly for human consumption, but some millers have said they may need more imported supplies in the medium term.

A separate USDA report on Thursday showed that as of Oct. 22, Mexican buyers have booked deals to buy 5.757 million tonnes of U.S. corn since the marketing year began, and already imported 1.669 million tonnes.

A year ago, Mexico’s marketing year total for purchases came to 6.110 million tonnes and imports stood at 1.779 million tonnes.

Reporting by Mark Weinraub; Editing by David Evans, David Alire Garcia and Cynthia Osterman