Mexican buyers are returning to buy large amounts US corn, driven by a weak dollar and a strong peso, market sources said.
The US Department of Agriculture, in its daily reporting system for large purchases, has reported in the past two days total export sales of 386,020 mt of US corn for delivery to Mexico during the 2017-18 marketing year, which will start in September and ends in August 2018.
Mexico traditionally imports large volumes of US corn, but they had slowed down their purchases at the end of last year and beginning of this year due to rhetoric by President Donald Trump against the North America Free Trade Agreement and the Mexican peso fluctuation, a market participant said.
The US dollar index bottomed at 91.621 Tuesday, which is an 11.75% drop since the beginning of the year, and the Mexican peso was up 19.56% year over year, which is making more accessible US corn for Mexican buyers, according to sources.
CBOT corn futures prices are posting new contract lows because of large supplies of old crop, expectations for a large US corn crop to come, and high world supplies, sources said.
Mexico is the main buyer of US corn during the current marketing year (2016-17), buying 13.941 million mt, of which 12.945 million mt already has been shipped, according the USDA.
CBOT front-month corn futures contract opened 0.5 cent lower at $3.33/bu Wednesday.
Corn is the primary feedstock for ethanol production in the US and is the main competitor for dried distillers grains.
