USDA: Colombia focuses on US corn as feed demand rises

The US Department of Agriculture (USDA) released details about the ongoing and expanding feed and food grain trade with Colombia Wednesday [October 24] in a Foreign Agricultural Service report​​.

The US is anticipated to be the primary source for some feed grains imported by Colombia, including corn, in the 2018/19 marketing year (MY), said the team who wrote the report.

Local corn production is anticipated to be flat for 2018/19, while imports of the feed grain increase past previous years, they said.

Wheat production in the South American country is expected to be lower in marketing year 2018/19 from the levels produced in 2017/18:

“Reductions in wheat area planted are permanent in Colombian given that the country has noncompetitive production systems and unfavorable climatic conditions for wheat cultivation."​

However, imports of the grain could see an uptick with more market share coming from the US, said the authors.

Corn trade​

Internal production of corn is expected to drop to 1.6m metric tons (MT) in 2017/18 – a 5.8% decline from the previous year, the report authors said. The production level is predicted to be flat in 2018/19.

The reduction stems from a drop in prices for growers causing a smaller area to be planted with the feed grain, they said. “Domestic corn prices are highly affected by international prices and exchange rates given that imports supply approximately 80% of the market."​

Domestic producers also face challenges from yields that remain half or less of what is grown per hectare in the US, they said. The area planted is about 40% white corn for human consumption and 60% yellow corn for feed and food use.

Total consumption is predicted to reach 6.7m metric tons in 2017/18 and increase to about 6.9m metric tons in 2018/19, the report authors said.

“Colombia corn consumption has been increasing in the past years motivated by a growing demand from the animal feed industry,” ​they said.

About 95% of the imported corn is set to be used in animal feed, they added.

Within the feed industry, poultry production uses about 66% of the total feed imported: “Livestock and swine sectors consume about 24%, and the remaining 10% is destined to aquaculture and household pets."​ 

Meat demand is expected to continue to grow as continuing economic growth boosts household incomes and animal protein consumption, they said.

Pork consumption has grown by 53% and poultry by 37% in the last 5 years.

“Feed demand will continue to grow, primarily in the poultry sector, as Colombia’s economy remains strong and dietary shifts adjust to populations moving out of poverty into the low and middle-income classes,”​ the report authors said.

Total corn imports are anticipated to reach 5m metric tons in 2017/18 and increase to 5.2m metric tons in 2018/19, they said.

US corn maintains a competitive edge through trade deals and less expensive transportation options.

Previously, Colombian importers brought in more of the feed grain from Argentina:

“US corn is still more competitive than Argentine corn because transportation costs from the US are cheaper given the geographical proximity,”​ said the market specialists.

Wheat use and imports​

In 2017/18, wheat use dropped by about 13.6% from the previous year, said the report authors. Wheat imported were elevated in 2016/17 by increased demands from the animal feed industry who used the grain to replace corn.

“In MY 2017/18, given market conditions, the animal feed industry did not import large quantities of wheat to supply their needs as they did the previous year,” ​they said. “Wheat feed consumption decreased to 200,000 MT in MY 2017/18. It will slightly increase in MY 2018/19 to 250,000 MT, following the growth in the animal feed industry.”​

Wheat imports declined to 1.85m metric tons based on the decline in interest from the feed industry, they said. Grain imports covered about 99% of the imported product, the remaining 1% was comprised of flour and wheat products.

Although grain imports dropped for 2017/18 interest in flour and wheat products actually increased, they said. In 2018/19, imports of wheat and wheat products are expected to increase slightly, with the US returning to supply a larger of the imported amount.

The US competes with Canada for market share on wheat imports, the report authors said.

“The feed and wheat milling industries maintain limited carry-over inventories of corn and wheat given the high cost of stocks due to deficient storage capacity throughout Colombia,” ​they said. “The feed and milling industries are estimated to maintain about two-month inventory supply to manage operations.”​

The expectation is that ending stocks will drop to about 423,000 metric tons in 2018/19 MT.