Asian corn demand shifts from Brazil to US Pacific Northwest, supporting US exports

Corn from the US Pacific Northwest has regained competitiveness into Asia following a rebound in the Brazilian corn FOB premiums supported by Brazilian farmers' preference to sell soybeans instead of corn, tighter logistics in Brazil and concerns about the new winter Safrinha corn.

The waiting time in Brazilian southern ports continues to build up, choking up export flows during peak corn export season. The waiting time in Santos was up to 23 days while in Paranagua, the waiting time is reaching close to 75 days, according to market sources. Furthermore, the slower pace of soybean planting and presence of replanting in certain areas in Mato Grosso could push corn planting later into March which could be detrimental to production yields during the El Nino years.

Market participants said that Brazil corn premiums for December and January loading were firmer overnight, crossing 100 cents/bu over December (Z) CBOT futures for December loading and 100 cents/bu over March(H) CBOT futures. Platts, part of S&P Global Commodity Insights, assessed Brazil corn FOB Santos January basis at 100 cents/bu over March (H) CBOT futures Nov. 16 while FOB US PNW corn February basis was assessed at 99 cents/bu over March (H) futures Nov. 17.

The cheaper freight from the Pacific coast to Asia and the additional benefit of being freed up from Brazilian logistics will start to move Asian demand to the US and support US export volumes for the 2023-24 marketing year (September-August), said several sources.

"The spread between Brazil and PNW has widened as Brazil old crop thinned out at this time of the season while PNW is pushing to capture demand everywhere in Asia," said a trader. A second trader said that the competitiveness of PNW corn had pushed Japanese buyers to pick up their buying pace and completed more than half of their February shipment demand.

Japan has started to switch demand from South America to the Pacific Northwest since mid-December shipment windows and traders concur that South Korea and Taiwan will be next. South Korean buyers had previously indicated that they preferred not to buy PNW corn but sources believe the buyers will start to buy if the spread continues to widen. Similarly, in an expected upcoming tender from Taiwan's feed buying group, it is anticipated that PNW corn will win the business.

Platts assessed corn CFR Northeast Asia at $256/mt Nov. 17, unchanged on the day, according to S&P Global data.

In Southeast Asia, corn procurement has slowly entered the challenging period as Malaysia and Vietnam both prefer South American corn but the reduced volume of Argentinian corn and export switch from corn to soybean in Brazil in the months of February and March will pose a challenge for buyers. Market participants said that if the corn export tail extends into March, it will provide respite to destination buyers.