Asia corn buyers eye switch to US on Brazil soy logistics overload

Asia's corn traders are eyeing a potential logistics pinch that could see exports stymied by Brazil’s soybean focus if China implements tariffs on US imports, market sources told Agricensus Thursday.

“If you have a 25% tariff on US soybeans, and China is paying over [for Brazilian soybeans] then everybody will want to pump out soybeans from Brazil… which could push more demand back into the US,” one market source said.

“Looking at Brazil for July and August, they are talking about logistics constraints. It could see 3-4 million mt of corn demand shift to the US,” a second source said.

Brazil exported some 29.2 million mt of corn in the 2017 calendar year, according to government data, with Iran taking the lion’s share at 4.8 million mt.

Immediately behind Iran, however, comes Egypt and Japan on 3.2 million mt and 2.9 million mt, respectively.

Japan is a long-standing buyer of substantial US corn volumes, while attractively-priced US Gulf supply has recently carved into the Egyptian market at the expense of Ukraine and Brazil.

Further down the list, Taiwan, South Korea and Vietnam collectively took 6.1 million mt of Brazilian corn, with all three regular US customers taking volume from the Pacific Northwest.

Vietnam, in particular, is a market where US corn exports have picked up following the resolution of phytosanitary concerns in the latter part of 2017.

Brazil exported some 68 million mt of soybeans in 2017, according to the data, 83% of which – some 53.7 million mt – went to China.