Myanmar's corn farmers could gain from US drought

The worst drought in more than 50 years that is affecting large parts of the United States is expected to reduce the nation’s corn output by about US$40 billion, according to the government and analysts.
At its height in July, more than 80 percent of prime US farmland was in drought and corn production this year is expected to fall by 13pc to 272 million tonnes, the US Department of Agriculture said. If the predictions prove to be accurate, the crop would be the smallest in nearly 10 years.
Dire crop forecasts have circulated for much of the summer and have been responsible for driving corn prices to record highs of $8.4375 a bushel (equal to 56 or 72 pounds or 25.4/32.7 kilograms depending on condition) on August 10, Dow Jones Newswires reported on October 23.
The reduced output is already putting pressure on exporters, ethanol producers and livestock owners by increasing the cost of doing business.
“We don’t have buffer stock and if we have another weather problem next year corn prices could explode again,” said Don Roose, president of US Commodities, Des Moines, Iowa. “We kept saying last year that we couldn’t afford a weather problem this year and look what happened, I kept telling people that weather is 80 percent of the market.”
According to global food price monitor Food and Agricultural Organization (FAO), export prices of corn in August remained close to the record levels reached in July 2012. The benchmark US corn averaged $328 a tonne, about 5pc higher than in August 2011.
Deteriorating crop prospects for corn in the United States initially underpinned export quotations, but prices eased towards the end of the month following heavy rains in areas hardest hit by drought.
After the US, China is the world’s second largest corn producer. Corn production in 2011 in China was forecast at 191.8 million tonnes and 8.1 million tonnes were imported. Average export of corn from 2008-11 was 100,000 tonnes based on FAO statistics.
Corn production in 2012 was forecast at 190 million tonnes, with a further 9.6 million tonnes slated to be imported, based on the forecast for 2012-13.
It is in this climate that Myanmar could benefit by feeding China’s need for corn.
Myanmar’s corn crop is mainly sown during the monsoon months, which typically stretch from May through September. The country’s corn sown area in 2011-12 was estimated at 1.017 million acres by the Department of Agriculture (formerly Myanmar Agriculture Service); of this, 88pc was sown during monsoon.
Total production was estimated at 1.46 million tonnes , with an average yield of 1.43 tonnes an acre.
Yields are comparatively high because many farmers use hybrid corn varieties, mainly CP brand, which are also requested by Chinese traders.
Average yields of hybrid corn are 60-70 baskets (1.47 -1.71 tonnes) an acre, compared with 30-40 baskets an acre (700-900 kilograms) for non-hybrid corn. However, hybrid variety corn also needs more fertiliser than non-hybrid strains.
CP company is involved in many aspects of the trade – it sells hybrid corn to farmers and then buys the milled feed, which is then used as nutrition for its chickens.
However, Myanmar’s corn is also sought after by Chinese traders, who buy up to 91pc of total exports.
Corn sown in northern Shan state is sent straight to the town of Muse on the Myanmar-China border, and then traded to Shweli (Ruili) in China. CP corn in Myingyan (Mandalay Region), Monywa (Sagaing Region), and Taunggyi (Shan State) is shipped to Mandalay, where it’s bought by traders to sell to China.
In Muse, the Ministry of Commerce established a trading zone at the 105-mile mark to facilitate Chinese trade. Commerce Journal, which is run by the Ministry of Commerce, maintains a regular corn price record based on free on board prices in Yangon. E-Trade Myanmar also keeps records of corn prices for 2012.
These show that corn price have been generally rising throughout 2012, hitting a high of about $414 a tonne in early September but have since fallen to about $316. By contrast, the average export price of corn ranged from $90-$250 a tonne during the 2010-11 year.
Myanmar’s corn exports have varied from 90,800-465,000 tonnes between 2001-02 and 2010-11. The 2010-11 fiscal year was the highest on record at nearly 465,000 tonnes, with 90.5pc exported to China.
However, with the shortfall in production in the US, prices are tipped to increase in China, India, Japan and Malaysia, which could be good news for Myanmar’s corn farmers.
The higher prices might affect poultry farmers by increasing the cost of feed, which will surely result in higher egg and chicken meat prices for consumers.
U Kyaw Myint is a former civil servant, and consultant with the United Nation’s Food and Agriculture Organisation’s Market Information Service Project, the Agriculture Market Information Service (AMIS) and E-Trade Myanmar.



Source mmtimes