Saudi Arabia Provides $112 Million for Corn Imports

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Nov 21, 2022 | Agricultural Markets

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Saudi Arabia produces about 15,000 MT of Corn annually, with an average yield of nearly 6 MT per HA. Domestic Corn production has been consistent over the past several years because Saudi Corn growers do not receive Government support, neither through direct production subsidies nor by Government-guaranteed prices. Saudi’s Government policy discourages the domestic production of water-intensive crops, including feed Corn.

Corn planting occurs twice a year, in the spring and summer. The spring planting is in March, with harvest in August, while the summer planting is in the last week of June, with the harvest from mid-November until the end of December. Approximately 60% of Corn production is from the summer crop. Imported Corn is primarily used for animal feed. About 200,000 MT is used to produce food processing ingredients, such as starch and sweeteners.

Domestically grown Corn is used as Corn-on-the-cob or milled for flour by small neighborhood flourmills. Corn continues to be an essential feed grain for poultry farms, and it accounts for approximately 60% of poultry feed formulations. It is also a critical feed grain used by commercial feed processors and domestic dairy farms.

Feed accounts for approximately 70% of broiler meat production costs. The Saudi poultry sector is presently confronting near-record high feed costs driven by the convergence of the tight supply of main feed ingredients (Corn and soybean meal) and record freight costs. A typical local poultry ration is made up of 60% Corn, 30% soybean meal, and 10% of other ingredients. Corn is preferred because it is highly digestible and an excellent dietary energy source, while soybean meal is selected for its high protein content.

MY 2021/2022 total Corn consumption is estimated at approximately 3.6 MMT, up by around 6% from USDA’s estimate of 3.4 MMT for MY 2020/2021. This is mainly due to the continued expansion in the Saudi local poultry farming sector that depends heavily on Corn. Corn consumption is projected to increase to 3.9 MMT in MY 2022/2023 due to anticipated improvements in the world Corn supply and the availability of competitive freight. Historically, commercial livestock feed processors increased their Corn usage up to 40% when Corn prices were $230 -$240 per MT. The current reported CFR Saudi port of entry price is $350 per MT.

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Saudi Arabia’s Corn Import

In January 2020, the Saudi Government stopped providing direct per MT Corn import subsidies to importers to purchase Corn from international markets. However, it still provides up to $187 million annually as a direct production-based subsidy to the poultry industry. Approximately $112 million is used to purchase Corn from local Corn importers or directly from the international market. However, poultry farms claim that the current production-based subsidy is not good enough to balance the increased CFR cost imported Corn.

The USDA projects MY 2021/2022 total Saudi Corn imports at 3.7 MMT. Numerous trade contacts indicate that Saudi Arabia recently purchased a total of 3.35 MMT of Corn for arrival by the end of August 2022, an increase of 11% y-o-y. As per AgFlow data, Argentina shipped 11.5 million tons of Corn in Jan-Nov 2022, followed by the United States (6 million tons), Brazil (4.9 million tons), and Ukraine (0.2 million tons).

Argentina was the largest exporter of Corn to the Kingdom in the MY 2020/2021, accounting for 57% of total Saudi Corn imports. The United States was the second largest exporter of feed Corn to Saudi Arabia, during the same period, with a market share of 24%, while Brazil was third, with a 17% market share.

Other sources: USDA

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