1/22/01

MEXICO CITY (B)--Mexico's livestock sector continues to snap up U.S. sorghum for the first quarter as uncertainty persists about the government's import policy for corn, traders said Jan. 12.

The Jan. 11 plunge in U.S. corn futures, the benchmark for sorghum, prompted a flurry of small trades for rail imports of U.S. sorghum in January and February, traders said. Many larger buyers had already covered themselves in December and earlier this month, according to traders.

One estimated that the week's sorghum total purchases surpassed 60,000 tonnes.

The week was highlighted by a deal by poultry firm El Calvario for various Gulf of Mexico shipments in the first quarter totaling 79,000 tonnes, according to the trade.

"It's a sorghum game right now," said one trader.

Many in the livestock sector would prefer corn, which is trading at a discount to sorghum right now. But the government so far has only granted duty--free import permits for first--quarter U.S. corn to the starch industry. The duty on U.S. corn exceeds 100%.

Mexico is the biggest export market for U.S. sorghum. It imported 4.5 million tonnes in the 1999--2000 marketing year ended Aug. 31, or equivalent to 74% of total U.S. exports, according to the U.S. Department of Agriculture.

Demand for U.S. sorghum has been further boosted during the past month because Mexico's spring--summer sorghum crop, which is harvested in the fall and winter, was unusually small.

Mexico is the third--largest world buyer of U.S. corn. Its imports in the 2000 calendar year are estimated at 5 million tonnes, at least. The calendar year is more relevant for corn because it is that schedule that determines import quotas and duties.

A decision on more first--quarter import permits is expected later this month.

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