Peru-US FTA to Drive US Corn Exports to Peru in Early 2014

By: Kurt Shultz, U.S. Grains Council Regional Director of the Americas

After two years of no U.S. corn exports to Peru, the competitively priced 2013 U.S. corn crop is expected to turn this around. The U.S.-Peru Free Trade Agreement (FTA), which was implemented in 2006, creates conditions where Peruvians will aggressively purchase U.S. corn in January and February of this year.

In recent years, the United States has been uncompetitive in the Peruvian market due to high prices compounded by more favorable duty treatment for South American producers. However, this year with the large supply of U.S. corn and the FTA, U.S. corn has a price advantage in the Peruvian market.

Under the FTA, U.S. corn imports have a zero percent duty on the first 670,000 metric tons (26.4 million bushels) of corn imports. Since the FTA contains first-come first-serve criteria, the Peruvian buyers will be competing aggressively to purchase U.S. corn early this year.

It is uncertain how long the price advantage will last when South American corn enters the market; however, it is likely that the United States will export at least 1 million tons (39.4 million bushels) of corn to Peru in the first two months of 2014.

This is just one more example of how FTAs are the long-term foundations that allow U.S. producers to benefit and create export opportunities.