US sees corn, wheat market expand in Chile

By Aerin Einstein-Curtis contact

- Last updated on GMT

Related tags: Wheat, Cereal

© iStock/stgutiez
© iStock/stgutiez
The US is becoming the top supplier of the feed grains wheat and corn to Chile, having ousted Canada from the position, says the USDA.

Details of agricultural exports were released in an agricultural specialist’s report​ from the US Department of Agriculture’s Foreign Agricultural Service (FAS).

Overall planting declined for wheat and corn for the 2016/17 marketing year (MY), said the specialist in the report. Both feed grains are used in feed rations for production animals.

“US wheat exports grew by 100% in volume in MY2015/16 over the previous marketing year and became the top wheat supplier to Chile with a 40% market share,” ​said the USDA. “Competitive US wheat prices and consistent quality (high gluten content) are the key reasons behind the surge in US exports. Canada was the second largest suppler holding a 31% market share, followed by Argentina.”

Corn import decisions are price based, and the US has had competitive prices for calendar year 2016, said the department. “Total corn imports increased by 13.3% MY2015/16 over MY2014/15 reaching 1,500,000 MT and are expected to keep increasing by 13% reaching 1,697,000 MT in MY2016/17 as production contracts 7% and domestic consumption for feed keeps growing,”​ it added.

Wheat production and imports

Wheat is used for both food and as a feed grain for swine and poultry, said the USDA.

The area planted in wheat for marketing year 2016/17 dropped by 10.5% to 255,000 hectares, based on weather concerns, said the department But, water is not anticipated to be a problem for the next year.

Production is not expected to increase in the 2017/18 marketing year, instead it is projected to remain flat at 1.4m metric tons, said the department. “Domestic prices remain competitive and producers do not have an incentive to plant more wheat,”​ it added.

“Although all regions reduced their planted area due to worries of imminent drought, the main decline in planted area occurred in Biobio and Maule,”​ the department said. “As a result, production is estimated to decrease to 1,366,005 MT in MY2016/17.”

Drought concerns were generated by a lack of rain in June and July, which hindered the sowing process, said the department. However, water conditions were better than anticipated.

In some parts of the country the reduction in wheat planting also led to an increase in the amount of oats planted, said the USDA. Oat crops reported higher profits for farmers and saw a 19% growth in marketing year 2016/17.

Concern about low international prices also may have led to the reduction in wheat planting, said the department. “Some producers claim that the purchasing power, or demand for wheat has been insufficient,”​ it added.

“They said that the demand is non-existent in some cases, as some mills import their wheat during months of December and do not buy from local producers,” ​said the department. “Thus, producers are forced to store their production. In many cases, producers lack the infrastructure and/or financial capacity to store their wheat causing them to sell at low prices.”

In 2015/16 US wheat exports to Chile reached 373,000 metric tons, up from the 186,000 metric tons imported the previous year, the department said. Imports in 2017/18 are expected to reach 1.05m metric tons.  

Corn market details

The amount of land planted with corn in Chile dropped to 95,000 hectares for marketing year 2016/17, said the USDA. Overall production is anticipated to fall to 1.09m metric tons – a decrease of 7% from the previous year.

A smaller area was planted with corn in expectation of reduced water availability, said the department. Corn yields in some regions also were limited as high temperatures accelerated corn maturity and reduced the growing period – yields could drop by up to 20%.

“Because of these factors, many farmers are not reaping high profits from corn production and some of them are moving towards other more profitable crops,” ​said the department. “Corn producers claim that current corn prices barely cover production costs because the price of inputs for production, such as seeds and chemical products, increased in MY2015/16.”

The area planted in 2017/18 is expected to see additional reduction, possibly down to 90,000 hectares, the department said. “Market conditions are very competitive and imports are expected to increase,” ​it added.   

Low US corn prices allowed the country to capture the majority of the import market for corn, said the department. The US supplied 56% and became the top supplier of corn for Chile.

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