International buyers reassured on quality and quantity of US grain for sale

Written by Jonathan Eisenthal

According to the USDA, corn exports are off 40 percent from their usual rates and grain buying for ethanol and livestock consumption are both off as well, but the 2012 Export Exchange conference hosted in Minneapolis by the US Grains Council and the Renewable Fuels Association helped reassure international buyers that good quality US grain is available.

The most recent estimates by the USDA for this year’s production, 10.7 billion bushels is down 13 percent from the 2011–a remarkable figure in light of the severe drought that struck much of the US Farm Belt this year.

Corn producers John Mages, David Ward and Lori Feltis all represented Minnesota’s corn organizations at the conference, which belong to the US Grains Council. Mages, who farms in Stearns County, took part in a panel discussion about how the harvest went. A farmer from Illinois told about how hard hit drought areas suffered and saw severely constrained production. Mages was able to report the states in the northern tier of the Corn Belt remained untouched by the worst of the weather conditions–the crop is abundant, the grain is high test weight, high quality. This was true for corn from Minnesota and the Dakotas, as well as from the Deep South–Mississippi and Louisiana saw bumper crops thanks to favorable rains.

“Minnesota had record production–1.4 billion bushels,” Mages told the audience. He also noted that “86 million acres harvested nationally was also a record. It’s a surprise that the yield was as good as it was, despite the drought. The hybrids are better than they used to be. This weather would have been completely devastating 20 years ago, but today we can withstand it better. The conference gave the grain buyers a chance to get a feel for what the crop was like in the US–producers like me and Lori and David, and some from the Dakotas and Illinois–it was good to hear directly from the farmer rather than relying on other sources, to know what the crop is like.”

Feltis noted that one particular concern among grain buyers, are the reports of widespread Aflotoxin–a fungus that thrives in drought-stressed corn.

“We were able to reassure them that it’s virtually non-existent in the crop coming from the northern states,” said Feltis.

The fact that central parts of the Corn Belt–huge producers like Illinois–have seen higher incidence of Aflotoxin, has created something of a two-tiered market, according to wire service reports. Buyers are paying premium prices for grain unaffected by the condition.

Because of the drought, many foreign buyers had the notion that this is a replay of 2009, when test weights were off for most of the US crop, but they learned that the opposite is true–despite the lower total production, test weight and quality are above average.

“These overseas buyers were able to make connections and contacts,” said Feltis. “It was a great chance for people to meet each other. It created an open forum, so they could tell us their concerns. For the Asian countries, the biggest concern was price. As a general rule, it seemed like they are very frugal buyers, very price conscious. So we were trying to explain that quality is important. That the results they will get feeding our grain to their animals will make it worth the price.”

 

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