* Brazil, Argentina corn prices rising on thinning supply
* U.S. corn exports to regain competitive edge from January
* Some traditional customers to resume buying U.S. corn
By Karl Plume
CHICAGO, Nov 15 (Reuters) - U.S. corn exports are poised to rebound from their worst slump in decades by early 2013 as rival global suppliers from South America and the Black Sea region, which have undercut the world's top exporter for months, run low on supplies.
Although the annual U.S. share of global corn exports may continue to shrink in the face of stiffer competition worldwide, the United States will likely dominate the market until at least March when the next South American harvest is gathered.
Export prices in Brazil have soared about 17 percent over the past month while Argentine exporters have stopped offering corn for sale until at least March or April.
Corn prices in Ukraine, the world's fourth largest exporter, have surged to levels on par with U.S. prices despite the generally lower quality of its crop.
"In January, February and first part of March, the United States should be more competitive as the global supplies have dwindled," said Sterling Smith, futures specialist with Citigroup.
Higher premiums for wheat, which has increasingly replaced corn in livestock feeding rations this year, could also help to increase demand for corn from the United States, the world's top producer and supplier of the grain.
Premiums rose this month to their highest levels in 21 months after wheat traded at a discount to corn as recently as mid-May.
"The South American export program is drying up for a pretty decent four- to five-month time period and that's going to put the U.S. back in the game," said a U.S. corn exporter.
Some traditional U.S. corn buyers who turned to South American grain this year amid lofty U.S. prices were beginning to return to their long-time supplier.
The U.S. Agriculture Department on Tuesday confirmed that an unknown buyer bought nearly 160,000 tonnes of U.S. corn this week. Export traders said the buyer was likely Japan, which usually accounts for 30 percent of U.S. corn exports, or South Korea.
Several South Korean feedmakers have also in recent weeks booked "optional-origin" corn purchases for early 2013 shipment after buying only South American corn for months. Since South American supplies would likely not be available until March or later, the orders should be filled with U.S. corn, traders said.
"It depends on how uncovered the world is, but demand could potentially put our exports above and beyond the current forecast," an exporter said, referring to the USDA's current export projection of 1.15 billion bushels (29.21 million tonnes) in the 2012/13 (Sept/Aug) marketing year, a 38-year low.
Export sales in the marketing year to date were, as of Nov. 1, at just 38 percent of that target, versus sales at 53 percent of the outlook at the same point last season, USDA data showed.
U.S. farmers produced their smallest corn crop in six years this season, sending prices to all-time highs as livestock producers, exporters and ethanol makers battled for grain. Some livestock producers even bought South American corn, booking the largest U.S. import program ever.
A bumper Argentine corn crop and record-large Brazilian crop stepped in to fill the U.S. shortfall this autumn, notching deals with traditional U.S. customers that were enticed by sharply discounted prices.
That export dominance is coming to an end.
Benchmark spot corn futures on the Chicago Board of Trade have retreated 14 percent from their record high of $8.43-3/4 per bushel on Aug. 10. Meanwhile, U.S. export premiums have only inched higher while South American basis values have soared.
Free-on-board (FOB) basis offers, which do not include freight or insurance, for spot shipments from the U.S. Gulf have crept up by only 15 cents per bushel since Oct. 1 while Brazilian corn export premiums at Paranagua port jumped by more than 90 cents and Argentine premiums gained 65 cents.
While prices for U.S. corn shipped in November and December remain at least $30 per tonne above levels in South America, U.S. prices for shipments early next year are far more competitive, trade sources said.
January export shipments from the United States, offered at about $314 per tonne FOB at midweek, were competitive with Brazil's offers of about $302 per tonne. The U.S. price for shipments to key markets in Asia and Europe would actually be cheaper when the cost of ocean freight is included.
Brazilian corn offers from mid-January through March were unquoted due to a lack of supplies, traders said.
LOGISTICS FAVOR U.S.
Shipping and grain handling woes have also tilted the market back in favor of the United States.
Top importer Japan this month purchased up to 500,000 tonnes of U.S. corn for January through March shipment to replace purchases from Brazil, where port congestion has delayed scheduled shipments by more than a month, traders said.
Still, Japan's purchases from the United States for 2012/13 remain well below normal, totaling slightly more than 3.1 million tonnes as of Nov. 1, compared with 5 million to 6 million tonnes at the same point in each of the previous three seasons, according to USDA data.
This season's record-large Brazilian export program tested the country's recent infrastructure investments, with total shipments to all destinations from 3 million to 3.5 million tonnes a month this autumn.
Brazil's Trade Ministry reported that the country exported a record 1.5 million tonnes of corn in the first week of November from all ports, most of it from Paranagua and Santos, but rainy weather in southern Brazil has since suspended loadings.
"There is virtually no local market pressure for corn and strong export demand. So the prices at the ports have shifted from a discount (to CBOT futures) of 40-70 cents a bushel over most of the year to a premium of about 5 cents in the past month," said Paulo Molinari, the veteran corn analyst at local consultants Safras e Mercado.
Historically high grain prices have encouraged Brazil and other emerging agricultural powers such as Ukraine and Russia to invest more in their grain export programs.
The high prices have also blurred traditional trade flows and reduced U.S. market share as importers seeking cheaper grain build relationships with other suppliers.
"There will be more competition going forward for the United States in corn exports," said Smith. "Now that countries know they can secure supplies from South America and elsewhere, the United States is going to face stiffer competition." (Additional reporting by Hugh Bronstein in Buenos Aires, Reese Ewing in Sao Paulo; Editing by Alden Bentley and Jim Marshall)
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