U.S. agribusiness Archer Daniels Midland is tightening its grain moisture guidelines for corn shipped on barges to U.S. Gulf Coast export terminals beginning in August to better meet export standards, trade sources said on Wednesday.
From Aug. 1, ADM will discount yellow corn barges with grain moisture above 14.5 percent, versus 15 percent previously, they said.
The move would bring moisture specs for incoming corn in line with standards written into most export contracts, analysts said. Top importer Japan has been requiring 14.5 percent moisture U.S. corn for years, they said.
It could also make it easier for ADM to manage corn export supplies in future seasons when a larger-than-normal share of incoming grain has a high moisture content. Last autumn, many exporters struggled to source enough dry corn to blend with wetter grain, which has less value in the export market.
“The export market is pretty much 14.5 (percent) at the Gulf so I think they’re trying to get some similarity there. Everybody got caught last fall with a high moisture crop that didn’t make some of the specs they wanted,” said Dan Basse, president of Chicago-based consultancy AgResource Co.
Lower moisture guidelines by one of the world’s largest grain handlers could prompt other exporters to make similar changes, Basse said.
But the stricter guidelines could also make it tougher for ADM river elevators to source corn from farmers as long as competing corn buyers accept grain with 15 or 15.5 percent moisture without any penalty, trade sources said.
It would also raise grain drying costs for farmers, they said.
ADM did not immediately respond to a request for comment.
February 19, 2015
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