Bunge downplayed the potential for Mexico, switching crop imports
from the US to South America, in a backlash against President Donald Trump, even as the agribusiness giant
flagged the prospect ahead of a flood of Argentine and Brazil crop sales.
Soren Schroder, the Bunge chief executive, asked whether
Mexico might source more of its crops South America, said that "I wouldn't say
that's the case, at least not at this point.
North American origins "both in terms of corn and soybeans
are obviously more than well supplied, with mounting surpluses", meaning they
will "remain the cheapest" source of agricultural commodities for Mexico".
The comments follow a threat by Mexican senator Armando Rios
Piter, who leads a congressional committee on foreign relations, to introduce a
bill shifting corn import demand from the neighbouring US to Brazil and Argentina.
The proposal follows plans by Donald Trump, the new US
president, to build a wall along the US border with Mexico, and impose taxes on
imports from its southern neighbour.
'It doesn't work'
A switch of Mexico – a large importer of the likes of corn,
soybeans and sorghum - to purchases from South America "frankly, all depends on
price" Mr Schroder told investors.
Cost of corn to delivered to Vera Cruz US and (Argentina), by month
April: $180 a tonne, ($206 a tonne)
May: $183 a tonne, ($205 a tonne)
June: $183 a tonne, ($204 a tonne)
July: $182 a tonne, ($202 a tonne)
August: $183 a tonne, ($204 a tonne)
Prices C&F, shipped from NOLA, US and Bahia Blanca, Argentina.
Source: Rice Dairy
"At the moment, it doesn't work" on price terms, and it was "way
too early" to consider whether other factors could spur market change.
Separately, data from Chicago-based broker Rice Dairy showed
that, April basis, US corn supplies, from New Orleans, are $0.65 a bushel
cheaper to ship to the Mexican port of Vera Cruz than Argentine supplies
exported from the northern port of Bahia Blanca.
For August delivery, the advantage was $0.53 a bushel, and
some $0.63 a bushel over supplies shipped from Brazil's Paranagua port.
'A lot of pricing
However, Mr Schroder highlighted the prospect ahead of a
wave of crop selling by South American farmers who have been slow to hedge so
far, in the face of a strengthening Brazilian real which has cut the value, in
local terms, of assets such as corn and soybeans priced internationally in
In Brazil, where farmers a "good 10%, maybe even a little
more by now, behind" in pricing their ongoing soybean harvest, more active
selling will start next month.
"We really do believe that as we get into March, March and
April will be the month when we will start seeing brisk [pricing]," he told
"So we've got a lot of pricing ahead of us."
'Large safrinha crop'
In corn, Brazilian hedging of the safrinha crop - currently
being sown, and which is the source of most of the country's exports – would
step up later in the year.
"Almost none of the new crop corn or the safrinha corn has
been priced, partly because prices at the moment are below the minimum price that's
guaranteed by the Brazilian government, so there's no incentive from any
farmers to sell in advance," Mr Schroder said.
However, with plantings "ahead of schedule", and "great"
growing conditions "it looks like we will have a very large safrinha corn crop,
and it will come to market sometime in the latter part of our summer".
In Argentina too - where "a lot of" the next corn harvest remains
to be priced, and "almost" none of the soybean crop has been hedged - farmer crop
sales are poised to increase.
"We expect that the Argentine farmer to be a seller of his
crop when he harvests it in April, May, and June," Mr Schroder said, adding that
the country's soybean crop may not have been affected by flooding as
significantly as some commentators believe.
"Many people expect… it's probably at least 55m tonnes, or
maybe a little more."
Some market forecasts last month dipped below 50m tonnes.