JUNE 1ST IS AN IMPORTANT CROP INSURANCE DATE

The frequent rains that soaked parts of the Corn Belt this spring have left many corn and soybean fields unplanted or with flooded areas that need to be replanted. Some producers are wondering what options they have under their multiple peril crop insurance policies. The first step is notifying your crop insurance agent as soon as possible and understanding crop insurance provisions.

In Iowa, the crop insurance late-planting period for corn begins on June 1 and varies across the Corn Belt. You can still plant corn after this date, but the insurance guarantee on those acres is reduced by 1% per day until planted. Corn acres planted after June 25 will receive insurance coverage equal to 60% of their original guarantee.

Producers should keep accurate records of planting dates on all remaining acres for both crop insurance and Farm Service Agency (FSA) purposes. The late planting period for soybeans in Iowa is June 16 through July 10.

Unplanted corn acres as of June 1

Beginning June 1, producers with unplanted corn acres have three choices.

•  Plant corn as soon as possible with a reduced guarantee.
•  Shift to soybeans with full insurance coverage.
•  Apply for prevented planting. Prevented-planting acres are insured at 55% of their original guarantee for corn and 60% for soybeans. A cover crop can be established on those acres or the land left idle (black dirt).

Acres that have been planted, but need to be replanted, may qualify for a special replanting insurance payment. Payments are based on the value of 8 bushels of corn or 3 bushels of soybeans per acre, times their respective projected insurance prices determined in February.

For 2017, that is about $32 per acre for corn and $31 per acre for soybeans, respectively. To qualify for an indemnity payment under the replanted or prevented planting provisions, a minimum area of 20 acres or 20% of the insured unit must have suffered loss, whichever is smaller.
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Producers should communicate with their crop insurance agent before making decisions about replanting or abandoning acres.

Establishing a cover crop is not required on prevented planting acres, but highly recommended. The rules set by USDA’s Risk Management Agency (RMA), which oversees the federal crop insurance program, do not require a cover crop.

However, RMA encourages cover crops and insureds will receive a full-prevented planting payment — even if they choose not to plant a cover crop. Leaving unplanted or abandoned acreage idle (black dirt) is probably not the best agronomic choice. Likely cover crop seed includes oats, wheat, barley, or millet.

Keep in mind, if you plant any kind of cover crop you cannot harvest or graze those acres until after November 1.

Expect most of Iowa fields will be planted this spring. A few acres may require replanting. For crop insurance purposes, these fields will be in the delayed planting or replant situation. Regardless, producers should keep good records of planting dates and acres for both crop insurance and FSA acreage certification. Write down the dates you planted, the crop, number of acres, and reference the farm name or number. Work with your crop insurance agent and understand the basic provisions of crop insurance. BY STEVE JOHNSON.

LEADERS OF SENATE AGRICULTURE COMMITTEE SAY NO TO FARM BILL CUTS.

Two days after President Trump proposed large cuts in food stamps and farm supports, the leaders of the Senate Agriculture Committee spoke out against funding cuts as the panel prepares to write the 2018 farm bill. Committee chair Republican Pat Roberts, took aim at reduced farm supports, particularly crop insurance, saying “Now is not the time for additional cuts.” The panel’s senior Democrat, Debbie Stabenow, opposed proposed cuts in rural development and public nutrition as well.

“The proposal cuts $231 billion from farm bill programs, which would make a five-year farm bill virtually impossible to pass,” said Stabenow. The administration proposed cuts 10 times larger than those written into the 2014 farm law.

The fiscal 2018 budget proposed by the White House would cut food stamps by $193 billion, or 25%, over 10 years, and crop insurance by $29 billion. It would also downsize land stewardship initiatives and eliminate many rural development programs.

At a hearing on the agricultural economy, Roberts pointed to a slump in both farm income and commodity prices since the collapse of the agricultural boom in 2013. USDA chief economist Robert Johansson said the farm sector was “in a very flat price environment,” and Nathan Kaufman, an economist at the Kansas City Federal Reserve Bank, said farmers were using up their cash reserves due to tight margins. “We haven’t seen it turn into an issue of solvency,” said Kaufman, because land values have held up well. Land is four fifths of farm assets.

“One thing is clear—times are challenging right now in farm country,” said Roberts. “Farmers, ranchers, and rural families understand fiscal responsibility. They want to do their parts. But now is not the time for additional cuts.”

“We need to make sure that producers have risk-management tools at their disposal. Let me emphasize that crop insurance is the most valuable tool in the risk-management tool box,” Roberts said, repeating the sentence on crop insurance twice. Crop insurance is the largest strand in the farm safety net, worth nearly $8 billion a year.

Stabenow said the Trump budget “would have devastating effects on our farmers and rural families. … More than 500 groups representing farmers, conservationists, rural communities, and food advocates wrote a letter that we should not make — we should not make — any further cuts. And I agree,” she said. BY CHUCK ABBOTT.

TIMING AND TEMPERATURE: KEY FACTORS TO CONSIDER BEFORE REPLANTING.

One way to describe the 2017 planting season? Soggy. If you have standing water in your planted fields, you may be considering replant. “Survival of young corn plants under these conditions depends on several factors,” says Roger Elmore, Extension cropping systems agronomist at University of Nebraska–Lincoln.

“Smaller seedlings are more susceptible than larger seedlings,” says Elmore in a University of Nebraska Crop Watch article. But the effect of standing water on germinating seeds is not well known. Hybrids will respond differently to standing water.

48 Hours

Timing is everything. If there’s standing water in your field, you have 48 hours before the oxygen supply will become depleted, says Elmore.

“Cool air temperatures help to increase the possibility of survival,” he says. “Yet, we would not expect survival of germinating seeds to be greater than that of young plants; they should not be expected to survive more than four days.”

Before emergence: Seeds can survive up to four days.

Prior to the sixth leaf and underwater (6 inches of water on surface) with a temperature less than 77°F.: Will survive for four days. Longer flooding results in lower yields especially at lower nitrogen levels. Some plants will be buried by sediment and residue and may not survive.

Prior to the sixth leaf and underwater (6 inches of water on surface) with a temperature greater than 77°F.: May not survive 24 hours.

Corn prior to sixth-leaf stage in saturated, cold soil with flooding: Seed rots, seedling blights, various other pathogens, crazy top.

If it becomes necessary to replant, consider which herbicides have been sprayed, says Randy Hagen, knowledge transfer manager at Monsanto. “Some crops can’t be planted back to a field that had a certain herbicide.”

Don’t make a drive-by assessment either, advised Hagen. “Investigate the stands by going out and doing population stands in several spots of the field.”

Also, as we get closer to June, it’s time to start considering switching maturities. “If you have an option to do silage, you may want to go in and replant with the same maturity,” says Hagen.

However, for grain, there may be a consideration to move to an earlier product. Hagen recommends looking at soil type, early frost dates, and yield potential of the of the original product before moving to an earlier maturity. If replanting goes into June, consider a hybrid five days earlier or so, he says.

Below are seven factors Elmore recommends considering when dealing with flooded fields.

1. The longer an area remains ponded, the higher the risk of plant death.
2. Completely submerged corn is at higher risk than corn that is partially submerged. Plants that are only partially submerged may continue to photosynthesize, albeit at limited rates.
3. Corn will survive longer when temperatures are relatively cool — mid-60s or cooler — than when it's warm — mid-70s or warmer.
4. Even if surface water subsides quickly, the likelihood of dense surface crusts forming as the soil dries increases the risk of emergence failure for recently planted crops.
5. Extended periods of saturated soils after the surface water subsides will take their toll on the overall vigor of the crop.
6. Associated with the direct stress of saturated soils on a corn crop, flooding and ponding can cause significant losses of soil nitrogen due to denitrification and leaching of nitrate N.
7. In addition, diseases and other problems can develop due to silt in the whorls. BY KACEY BIRCHMIER.

3 BIG THINGS TODAY, MAY 29TH.

1. Chicago Board of Trade Closed in Observance of Memorial Day
The Chicago Board of Trade is closed in observance of the Memorial Day holiday. Trading will resume at its normal time this evening.

2. Money Managers Most Bearish on Beans Since Last Week of 2015
Money managers increased their bets against rising soybean prices to the largest level since the last week of 2015.

Speculative investors were net-short by 69,775 soybean contracts in the week that ended on May 23, according to the Commodity Futures Trading Commission. That’s up from 39,312 contracts a week earlier and the largest level since the seven days that ended on Dec. 29, 2015.

Investors likely increased their net-short positions in soybeans amid growing global supplies and expectations for a large U.S. crop.

World output is forecast at a 348.04 million metric tons in the year that ends on Aug. 31., according to the U.S. Department of Agriculture.

U.S. production is expected to reach a record 4.307 billion bushels this year before declining to 4.255 billion bushels next year, the USDA said in a report earlier this month.
Net-shorts in corn, however, declined to 173,188 contracts, the lowest in three weeks, according to the CFTC.

Bets against higher prices in soft-red winter wheat fell to 120,701 contracts from 130,695 the prior week, while net-long positions in hard-red winter wheat were almost unchanged at 1,686 contracts, the CFTC said.

3. Isolated Thunderstorms Expected in Parts of Midwest But Region Mostly Dry Monday

Isolated thunderstorms are expected in parts of the U.S. Midwest including areas in Iowa, Illinois and Michigan, though no severe weather is expected.

In Iowa, thunderstorms are possible today and this evening before giving way through Wednesday when another system will move through the state. The storm later this week could produce “gusty wind and hail” and locally heavy rain, the National Weather Service said in a report early Monday.
In Illinois there’s a “limited” risk of thunderstorms today, but flooding will continue along portions of the Kankakee River. Storms will spark up again later this week, though the odds of anything major are limited, the NWS said. Lightning is expected.

Storms, however, are forecast for today and tonight in parts of Michigan, though severe weather isn’t expected. Starting Thursday, another warm front will move through the state, according to the agency. BY TONY DREIBUS.

THE NEXT MONTH WILL BE CRITICAL FOR DISEASE DEVELOPMENT.

Recent cold, wet field conditions and fluctuations in soil temperatures have put early-planted corn at risk for seedling disease, and there may be considerations for replant in some areas.

“It’s been a mixed bag across the country,” says Randy Hagen, knowledge transfer manager at Monsanto.

“Cold soil temperatures and episodes of recent rainfall are especially favorable for some of the most common and damaging seedling diseases favored by cold wet conditions,” says Tamra Jackson-Ziems, University of Nebraska (U of N) Extension plant pathologist in a U of N Cropwatch article. “Numerous seedling diseases can take advantage of any of these conditions.”

Monitor seedling emergence and stand establishment in the coming weeks so diseases can be detected early.

Seedling diseases can be caused by any of several common soilborne organisms, such as Pythium, Fusarium, Rhizoctonia, or parasitic nematodes. To complicate things, seedling diseases can be confused with insect injury, herbicide damage, planting problems, or environmental stresses that often have similar symptoms, says Jackson-Ziems.
Look for these symptoms of seedling diseases:

• Rotted seed prior to germination   
• Rotted or discolored seedlings after germination prior to emergence
• Postemergence seedling damping off 
• Root or hypocotyl decay

At least 14 species of Pythium have been identified that can cause seedling blight and root rot. These pathogens require excessive moisture, says Jackson-Ziems.

“The pathogen overwinters in soil and infected plant debris by producing thick-walled oospores that can survive for several years in the absence of a suitable host and favorable weather conditions. In addition to wet soil conditions, some species of Pythium are favored by cold soil conditions and are most likely to cause seed and seedling diseases lately,” says Jackson-Ziems.

At least six Fusarium species can cause seedling diseases and root rots. Stressed plants due to weather extremes (temperature and moisture), herbicide damage, and physical injury are more prone to infection and disease caused by Fusarium species, says Jackson-Ziems.

“Rhizoctonia species can also cause seedling diseases, but tend to be more common in drier growing conditions,” says Jackson-Ziems. “Rhizoctonia tends to cause reddish-brown lesions that can girdle and rot off roots. Root and crown rot may be severe enough to cause seedling death.”

Management

The most common method for disease management is the use of seed treatment fungicides.
In general, corn has protection from early disease because it’s been treated, says Hagen. Most seed corn is already treated with more than one seed treatment fungicide, often an insecticide, and, sometimes with a nematicide.

These products can provide protection against some of the pathogens that cause seedling diseases; however, they only provide protection during the first few weeks immediately after planting.

Scout fields

Diseases may still develop due to extended periods of inclement weather or if they are under severe pathogen pressure, says Jackson-Ziems.

The next month or so will be critical, says Hagen. “Look at field history, what has happened in your area, and what conditions are present today,” he says.

He recommends knowing what potential disease exists in your field. “Don’t wait until the last minute,” says Hagen. “Check your fields regularly, and ask your agronomist a lot of questions. Being aware is an important management tool in today’s world.”

Pay additional attention to areas that had standing water, warns Hagen. In places with a lot of standing water, there’s a higher risk of disease.

“If it is cold and wet, pay attention to that,” he says. “Those are potential signs for future diseases. But if it gets hotter and drier during the summer, that will go away.”

For some of those diseases, there’s nothing you can do, says Hagen. But knowing that history will help your to make management decisions next year.

If you’re considering replant, don’t make a snap decision. “Wait on replant until it’s a time where it makes sense,” says Hagen.

So far, replant has been minimal throughout the Midwest, says Hagen. But if you’re in a situation where replanting is a consideration, remember these steps:

1. Evaluate the stand in several areas throughout the field.
2. Consider the soil type. Soil type is key to understanding if there’s a chance for crusting and compaction, says Hagen.
3. Check the herbicide history.
4. Consider the time of year. If it gets too late, you may need to switch maturities to an earlier product. But until it gets later, you may not want to change the maturity.
5. Factor in early frost dates. BY KACEY BIRCHMIER.

U.S, CHINA ACCELERATE BEEF TALKS, DEAL POSSIBLE BY EARLY JUNE.

CHICAGO, May 19 (Reuters) - Talks on restarting U.S. beef exports to China are moving fast and final details should be in place by early June, the U.S. Department of Agriculture said on Friday, allowing American farmers to vie for business that has been lost by rival Brazil.

As part of a trade deal, U.S. ranchers are set to halt the use of growth-promoting drugs to raise cattle destined for export to China and to log the animals' movements, according to the USDA.

The two sides are negotiating to meet a deadline, set under a broader trade deal last week, for shipments to begin by mid-July.

Finalizing technical details in early June should mean beef companies, such as Tyson Foods Inc and Cargill Inc , can sign contracts with Chinese buyers to meet the deadline, the USDA said.

China banned U.S. beef in 2003 after a U.S. scare over mad cow disease. Previous attempts by Washington to reopen the world's fastest-growing beef market have fizzled out. But now, the quick progress of the latest talks is raising hopes of U.S. farmers.

"Both sides feel the urgency to get it done by the deadline," said Joe Schuele, spokesman for the U.S. Meat Export Federation, which represents Tyson, Cargill and other meat companies.
China's embassy in Washington could not immediately be reached for comment.

BRAZIL WOES

The timing of the new deal allows U.S. producers to benefit as Brazil, the world's top beef exporter, is struggling with scandals and rival shipper Australia is suffering from a drought that is hurting production, analysts said.

China accounted for nearly one-third of the Brazilian meat packing industry's $13.9 billion in exports last year.

But in March, Beijing briefly banned Brazilian imports after Brazilian police accused inspectors of taking bribes to allow sales of rotten and salmonella-tainted meat.

JBS SA, the world's largest meatpacker, was involved in the probe and in separate allegations this week that Brazil's president conspired to obstruct justice with the company's chairman.

The food-safety probe hit Brazil's beef exports, which fell by 24.6 percent to $378 million in April from March, according to Abiec, an industry group that represents meat processors accounting for about 90 percent of Brazil's exports.

"This is a very opportune time for the U.S. to step up," said Derrell Peel, an agricultural economist at Oklahoma State University.

Chinese appetite for beef has climbed due to its expanding middle class. In 2003, its imports totaled just $15 million, or 12,000 tons, including $10 million from the United States, according to the USDA.

TRACKING CATTLE

Brazilian exporters hope China's trade deal with Washington will not inflict more pain on meat companies in the country because U.S. exporters will be targeting different, higher-end customers, said Abrafrigo, an association representing Brazil's small meatpackers.

To reopen U.S. trade, Beijing has accepted a U.S. proposal in principle that would require producers to document the locations where cattle raised for beef exported to China are born and slaughtered, the USDA said. The system would be less onerous than tracking cattle throughout their entire lives, during which they can be kept at up to four different locations.

Peel, a livestock expert, estimated that U.S. producers trace the movements of less than 20 percent of the nation's cattle.

Under another rule, U.S. beef exported to China must be raised without a class of growth-enhancing drugs known as beta-agonists that includes Elanco's Optaflexx, according to the USDA. Elanco, owned by Eli Lilly and CO, declined to comment.

A trade group for veterinary drug companies, the Animal Health Institute, said China should accept beef from cattle raised with beta-agonists because they are safe.

U.S. beef shipments to China also will have to come from cattle under the age of 30 months, according to the USDA. Most U.S. cattle will meet that requirement, the U.S. Meat Export Federation said.

The terms of the deal are a win for the United States over Canada, which is approved to ship only frozen beef to China.

China already bans meat from Canadian cattle fed with Optaflexx, according to the Canadian Meat Council. It also requires that Canadian beef be produced from cattle that are less than 30 months old and can be tracked to the farm where they were born. BY TOM POLANSEK.

WEEKLY OUTLOOK: SUMMER PRICING FOR CORN AND SOYABEAN

Recent corn and soybean price declines associated with the political situation in Brazil erased the slight gains since the release of the March 31 Prospective Planting report. The sudden drop gives an indication of the fragility of the current soybean market, in particular. The information in the USDA's May 10 WASDE report is already incorporated into prices and the possibility of weather-related price runs in the summer are in focus. The following factors bear watching for possible pricingopportunities during the summer months for soybeans and corn.

In the soybean market, an indication of increasing consumption but larger ending stocks associated with increased production create an expectation of declining prices for the summer months barring a severe weather event. One factor of note is the large South American soybean crop and the potential impact on U.S. soybean exports. Currently, soybean exports are ahead of the pace needed to meet the projection of 2.05 billion bushels for the 2016-17 marketing year. Brazilian production is up approximately 12% in 2017 over last year's crop at 8.48 billion bushels and projected production for the 2018 crop is at 8.41 billion bushels. To date, Brazilian exports have been sluggish but the rapid drop in the Brazilian Real last week brought increased sales by Brazilian farmers. Weekly exports of U.S. soybeans may weaken under the increased competition. The large Brazilian crop looks to place downward pressure on exports in the summer months.

U.S. soybean planted acreage and yield will be key factors in soybean prices this summer. The release of the June 30 acreage report could be particularly bearish for soybean prices. The U.S. average soybean yield is projected at 48 bushels per acres with 89.5 million planted acres reported in USDA's Prospective Planting report. The cold and wet planting season in the Corn Belt with numerous reports of replanting of corn could lead to an increase in planted acres in soybeans for the 2017 crop year. Soybean plantings in the May 15 report sat at 32% which is on pace with the five-year average. If there is a lack of prevented planted acreage, the prospect of soybean acreage exceeding intentions looks more likely.

Corn prices this summer will be impacted by export progress and production issues. Current corn export levels are running above the pace to meet the projected 2.225 billion bushels for the 2016-17 marketing year. South American corn production recovered in 2017 from the drought-plagued 2016 crop year with Brazilian corn production projected at 3.78 billion bushels and Argentinian production projected at 1.57 billion bushels. The corn crop in South America will be entering the market this summer and will provide stiff competition for U.S. exports.

U.S. corn yield and production will be key to possible corn price runs in the summer. The U.S average corn yield is projected at 170.7 bushels per acre, and prospective planted acreage is at 90 million acres. While it is too early to deduce the impact of the poor planting season on corn yields and acreage choices, there exists the potential for lower yields in corn than in the last three years. The Crop Progress report on May 15 showed corn planting catching up to normal planting levels after a slow start. The first crop condition report by the USDA bears watching. Corn acreage may also be less than indicated in the Prospective Plantings report.

Risks associated with waiting for a summer price rally before pricing the 2017 crop is larger for soybeans. It may be prudent to price soybeans if a rally occurs in June before the release of the June acreage report. There is likely less risk of lower corn prices for several reasons. Soybean acreage is more likely to surpass planting intentions, creating a scenario in which production could be large even with a modest yield loss. Soybean yields may also be less vulnerable to problematic summer weather than corn. Soybean prices appear more vulnerable to downward price movements given large current supplies and the expectation of a large crop in 2017. Fundamental supply and demand factors are supportive to corn prices for the 2017-18 marketing year with the expectation of smaller production and reduced ending stocks.

If a summer rally in prices occurs, producers should consider aggressively pricing the 2017 soybean crop. A weather market may produce larger price increases for corn. The price decline that occurred last week on one piece of political news out of Brazil provides an indication of just how precarious soybean prices are currently. The weather experienced thus far in the crop year may foretell the potential for weather rallies through the summer months, but the fundamentals underlying both crops indicates a greater risk in soybean prices. BY TODD HUBBS.

WET NOW, LESS CERTAINTY FOR WHAT LIES AHEAD FOR 2017 GROWING SEASON.

So what’s up for weather for the rest of the growing season for 2017? Here’s an update from Alan Czarnetzki, a University of Northern Iowa meteorologist. Czarnetzki spoke at last week’s Iowa State University Soil Management and Land Valuation Conference.

We’re in-between an El Niño and La Niña 

El Niño is the warming of ocean water in the eastern tropical Pacific Ocean. In La Niña, cool water extends from eastern tropical Pacific Ocean further west in the Pacific Ocean. Iowa had an El Niño event the summer of 2015.

“It wasn’t really that strong, but during the June through August period that year, temperatures averaged 1.3 degrees below normal,” says Czarnetzki. “It was the 29th coolest year among 144 years of records. Precipitation was 3.91 inches above normal. It was the seventh wettest among 144 years of records.”

Last summer was a neutral situation, with neither an El Niño or La Niña occurring. “In Iowa, temperatures from June to August were 1.2 degrees above normal. It was the 50th warmest among the 144 years of records. Precipitation was 1.92 inches above normal, was the 20th wettest among 144 years of records,” according to Czarnetzki.

It’s the same story for 2017. “We are not in an El Niño or La Niña, as we are presently in neutral conditions,” he says. Unfortunately, neutral conditions are not helpful to the forecasting process. “There can be a wide range,” he says.

Soil moisture is abundant in the Midwest

That’s particularly true in areas like southern Missouri. Some areas, such as much of northern South Dakota and southern North Dakota, are abnormally dry, according to the U.S. Drought Monitor. But they’re the exception.

“Moisture conditions should be more than adequate," he said. The latest National Weather Service (NWS) map shows odds are higher for above-normal precipitation from June through August, particularly in western South Dakota and western Nebraska.

Summer Temperatures

The three-month forecast from the NWS is a bit murkier for June through August temperatures. At this point, there’s an equal chance for above-normal, below-normal or near-normal temperatures in the Dakotas, Nebraska, Kansas, Iowa, Minnesota, and northern Missouri. BY GIL GULLICKSON.

WET CONDITIONS UNDERPIN CORN, SOYABEAN PRICES MONDAY.

DES MOINES, Iowa -- On Monday, the CME Group’s farm futures remain stronger.
At mid-session, the July corn futures are 4 1/4¢ higher at $3.76, while December futures are 4¢ higher at $3.94.


July soybean futures are 6 1/4¢ higher at $9.59, November soybean futures are 6 1/2¢ higher at $9.58.

July wheat futures are 6 1/2¢ higher at $4.41.

July soy meal futures are $1.70 per short ton higher at $308.70. July soy oil futures are $0.10 higher at 33.14¢ per pound.

In the outside markets, the Brent crude oil market is $0.43 per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 97 points higher.

Jack Scoville, The PRICE Futures Group’s Senior Market Analyst, says the weather-driven market is still focused on wet conditions and replanting of corn.

“Wet is the four letter word. More rain over the weekend and forecasts for more this week have kept speculators doing some buying or at least not selling more,” Scoville says.
For this afternoon’s USDA Crop Progress Report, the trade Ideas are that corn planted progress can be as much as 85%.

“But, talk of big replanting to be done and talk of yellow crops keep ideas about condition highly variable,” Scoville says.

He adds, Soybean investors are seeing slow planting and no business at all from South America.  Wheat is up on wet weather creating planting delays for spring and condition worries for winter.  So wet is pushing prices higher today in a moderate volume day,” Scoville says. BY MIKE MCGINNIS.

MEXICO BUYS CHEAPER BRAZIL CORN AS NAFTA TALKS LOOM-OFFICIAL.

MEXICO CITY, May 17 (Reuters) - Mexico expects to import a record amount of yellow corn from Brazil this year after its livestock producers secured lower prices in deals with suppliers on a recent visit to South America as NAFTA talks loom, a Mexican official said Thursday.

Alejandro Vazquez, a government official who was part of a Mexican delegation that visited Brazil and Argentina last week, said Mexican livestock companies on the trip had negotiated directly with suppliers and cut out commodities traders such as Cargill Inc and Louis Dreyfus that normally arrange shipments.

Following repeated threats by U.S. President Donald Trump to pull out of the North American Free Trade Agreement, Mexico, a net grains importer, has been eager to show the United States that it has options to trade elsewhere.

It has touted an upcoming visit to China and trade talks under way with the European Union, Brazil and Argentina , while looking for new suppliers for the U.S. grains that make up most of its imports of corn, wheat and soybeans.

The Trump administration launched the process for opening NAFTA for revisions on Thursday and will likely face pressures from the politically connected U.S. corn industry to maintain market access to Mexico, one of its biggest customers.

Higher costs and longer shipping times have in the past limited Mexican imports from South America. Before the trip, yellow corn from Brazil cost about $15 per tonne more for Mexico than U.S. corn.

But Mexican companies signed deals in Brazil for two shipments of 30,000 tonnes each for delivery in August that were only $3 to $5 per tonne higher, part of the 300,000-tonne total they plan to import between August and October at roughly the same price, Vazquez said.

"If prices become even more attractive, they could import even more," Vasquez said, adding that bigger deals could cut margins further. "And in some regions of Brazil, yellow corn is even cheaper than in the U.S." for Mexico.

Vazquez, the head of Aserca, an agency in the Agriculture Ministry that promotes Mexican products, said the livestock companies chose to pay more for Brazilian yellow corn as an investment in case NAFTA unravels and disrupts the cheap access to U.S. corn they use for animal feed.
"For them, it's not an option to be closing their plants," Vazquez said.

The 300,000 tonnes of yellow corn from Brazil this year would be a tiny fraction of the 12.75 million tonnes that Mexico imported from the United States last year. But it would be nearly five times more than it imported from Brazil last year and a record, Vazquez said.

Vazquez said Mexico should have shopped around for alternatives to U.S. grains long ago.
"Mexico was in a comfort zone," he said. "We didn't need to go and seek these opportunities that we're finding now." (Reporting By Mitra Taj; Editing by Bill Trott). BY MITRA TAJ.