The US Vanishes From Chilean Corn Market
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During the crop year 2019/20, Chile produced nearly 593,000 tons of Corn, down from 973,200 tons recorded during the previous crop year. For MY2022/23, the USDA forecasts 830,000 tons of Corn production, a 2.5 percent increase from MY2021/22. The area harvested will total 74,000 ha, but yields are expected to be slightly lower due to the persistent droughts that have impacted Chile for the past decade.
In MY2022/23, due to a rise in domestic Corn price, the area harvested is expected to increase by 4 percent totaling 74,000 hectares. The area harvested is not likely to increase drastically because some areas that were historically used for Corn production were replaced with fruit orchards.
The USDA projects MY2022/23 average Corn yield at 11.2 tons per hectare, a 2 percent decrease over MY2021/22 due to the persistent drought that affects the Corn production area, which ranges from the Metropolitana to the Biobío region. The average Corn yield in the Metropolitana region, in the central part of the country, is around 8.8 tons per hectare. In contrast, in the southern part, yields can reach up to 13.0 tons per hectare due to higher water availability from precipitation. For the past two marketing years, drought was particularly severe in the O´Higgins and Maule regions, which together hold 63 percent of the Chilean Corn planted area.
The cost of importing Corn from the United States and Argentina increased significantly in December 2021 and January 2022. The cost of importing Corn from the United States increased from $254 per ton in January 2021 to $424 per ton in January 2022. Similarly, importing Corn from Argentina went from $263 per ton in January 2021 to $350 per ton in January 2022. The increase in the cost of importing is attributed to the rise in international prices of Corn and a rapid increase in freight costs. In this case, Argentina holds an advantage over US Corn due to its proximity to the Chilean market.
Due to limited pork and poultry production and high Corn prices, the USDA forecasts feed and residual consumption for MY2022/23 will remain flat at 2.85 million tons. Food, seed, and industrial consumption will reach 320,000 tons, and total consumption will hit 3.17 million tons. Pork and poultry production capacity increased year to year due to efficiency in the use of feed and productivity improvements. Animal feed constitutes 90 percent of the Chilean Corn consumption in Chile. The remaining 10 percent corresponds to food and seed production. Chilean Corn stocks will increase by 6.7 percent in MY2022/23, totaling 140,000 tons.
Chilean Corn Trade
For MY2022/23, the USDA projected imports to remain flat at 2.35 million tons to cover domestic consumption, which is mainly for pork and poultry feed. Despite domestic Corn production increasing by 2.5 percent, domestic production alone will not be enough to cover the demand from pork and poultry producers. Chile imports Corn from the United States, Argentina, Bolivia, and Paraguay. The Chilean pork, poultry, and salmon industries also demand Corn gluten meal sourced from the United States.
Chilean imports of Corn decreased by 17.5 percent in MY2021/22 over MY2020/21 (data until January). Argentina remains the main supplier of Corn in MY2021/22 with a 93.7 percent market share. Argentina remains very competitive in Corn prices and has the proximity advantage, which became more critical due to the increase in transport costs observed in MY2021/22. According to AgFlow data, Argentina led the Chilean Corn import market with 2.2 million tons in Jan – Oct 2022, followed by Paraguay (0.1 million tons) and Uruguay (0.03 million tons).
Other sources: https://www.usda.gov
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