Production:

Corn production is very limited in Saudi Arabia. Every year an estimated 80,000 MT is produced for both animal and human consumption. Domestic dairy farmers plant significant acreage of corn silage as a source of digestible fiber and readily fermentable energy for their cattle.

The corn crop is planted in the spring and summer seasons. The spring crop is planted in March and harvested in August, while the summer crop is planted in the last week of June and harvested from mid-November until the end of December. About 60 percent of corn production is planted in the summer season. The area planted to corn in MY 2014/2015 was estimated at 14,300 HA, with an average yield of 5.6 MT per hectare.

Domestic corn production has been constant over the past several years because the Saudi corn growers do not receive any government support, neither through direct production subsidy nor by government guaranteed prices. The government policy has been discouraging domestic production of all water-intensive crops, including feed corn, and has been offering financial incentives to corn imports.

Consumption:

In MY2013/14, total corn consumption was estimated at 2.63 million MT and projected to increase by about 31 percent in MY2014/15, to 3.45 million MT. All imported corm and most of the locally produced corn is used primarily for animal feed processing, while small quantity of imported corn is utilized in production of food processing ingredients such as starch and sweeteners. Some limited quantities of the locally grown corn crop are used for human consumption (corn-on-the-cob) and milled for flour by small neighborhood flour mills for baking needs.

Corn is a very important feed grain in poultry farms as it accounts for about 60 percent of the total feed ingredients used in poultry feed formulations. It is also a major feed grain used by commercial feed processors and the domestic dairy farms. As feed accounts for about 70 percent of the total production cost, particularly for broiler meat, the Saudi government has been providing import subsides for feed corn and other feed ingredients, including DDGS and CGF to help reduce production costs of poultry meat, table eggs, dairy and livestock meat products.

Corn consumption in Saudi Arabia is forecast to reach 4.5 million MT in MY2015/16 mainly due to the expected drastic increase in the domestic feed processing. The government has been offering various subsidies and loans to encourage the establishments of new feed processing factories as well as to assist existing ones to expand production of compound feeds. This will help reduce the Kingdom's heavy reliance on imported feed barley. Many feed processors have been making use of the generous government supports to establish new production facilities or significantly increase the capacities of the existing ones.

ARASCO will complete its massive facility expansion projects by the end of 2015. This should double its compound feed production capacity. The new expanded facilities will allow ARASCO to produce 4 million MT of compound feed in the next couple of years. Corn is used heavily in the production of Wafi, ARASCO's signature livestock feed brand, which is gaining popularity among livestock farmers at the expense of grain barley. ARASCO has plans to increase Wafi's production from 650,000 MT in 2014 to 3,000,000 MT by 2017. As corn is the major ingredient used in the production of Wafi, ARASCO is expected to triple its corn consumption by MY2016/17. Other smaller feed processors are expanding their production facilities as well to get their share of the expanding processed feed market and will increase their corn consumption.

Among the reasons for the huge increase in demand for corn in Saudi Arabia is the ongoing expansion projects of several large poultry farms scheduled to be completed in the next couple of years. The mega dairy farms will also continue their heavy dependence on corn to meet their increasing demand for dairy cattle feed. Another factor that could help increase feed demand is the Saudi government plans to phase out green forage production next year, as part of its water conservation efforts. When that happens, demand for processed feed and corn will increase drastically.

Industrial Use:

The Middle East Food Solutions Company (MEFSCO) is a joint venture established by ARASCO and the Cargill Co. to manufacture starch-based products for the Saudi market and to exports to the MENA region. MEFSCO is expanding its facilities to increase corn processing capacity from the current 100,000 MT to 300,000 MT annually by 2016. The plant produces starches, sweeteners, glucose, high fructose corn syrups and other food processing ingredients for confectioneries, juices, and bakery. MEFSCO is based in Al-Kharj, and depends on imports for its corn processing needs.

Trade:

Feed corn is one of the 31 feed processing inputs that receive import subsidies by the Saudi government. Currently, the Saudi government pays $120 per MT subsidy for imported feed corn to help reduce compound feed production costs. The import subsidy is paid directly to corn importers who may be dairy farms, poultry farms, feed processors or licensed importers who distribute to smaller feed processors.

In MY2013/2014, Saudi corn imports reached about 2.7 million MT, about a 30 percent increase over imports in the previous year. During this period, the U.S. became the leading corn supplier to Saudi Arabia, with total export exceeding a million MT for the first time in 15 years and controlling a 38.5 percent of the Saudi corn import market. The U.S. increased its corn exports by nearly three folds, from 347,233 MT in MY2012/13 to 1,033,014 MT in MY2013/14. The average FOB price of the U.S. corn declined from $345 per MT in MY2012/13, to $211 per MT in MY2013/14. The FOB prices of the Latin American suppliers were similar or lower than the U.S. average price.

Last year, Brazil was the second largest corn exporter to Saudi Arabia with 36.9 percent, followed by Argentina in third place with 22.4 percent market share. Brazil was also a significant beneficiary from the expanded Saudi corn imports last year, as it increased its total exports by about 41 percent, while Argentina lost about 23 percent compared to MY2012/13.

Supplying Country

Oct 2011-Sep 2012

Oct 2012-Sep 2013

Oct 2013-Sep 2014

Quantity

Market Share

Quantity

Market Share

Quantity

Market Share

Brazil

659,034

57.0%

702,653

34.1%

990,616

36.9%

Argentina

613,844

53.1%

1,011,878

49.1%

599,964

22.4%

U.S.

363,843

31.5%

347,233

16.8%

1,033,014

38.5%

Other

178,791

15.5%

895

0.0%

60122

2.2%

Total

1,815,512

100%

2,062,659

100%

2,683,716

100%

Source: Global Trade Atlas

Exporting countries' data for the first three months of MY 2014/15 puts total Saudi feed corn import s at 957,640 MT, a 21 percent increase compared to the same period in the previous year. During this three-month period, Brazil accounted for 40.3 percent of the total Saudi corn import, followed by Argentina at 33.8 percent and the U.S. with about 25.9 percent. According to the U.S. Grains Council (USGC), two large Saudi corn buyers have purchased a total of 475,000 MT of U.S. corn for January-July shipments.

The total Saudi corn import for MY 2014/15 is projected to grow about 30 percent, to 3.5 million MT due to the expected substantial increase in corn consumption mainly as a result of increased compound feed production by feed processors and increased demand by the expanding poultry farming. With the anticipated sharp strong demand for compound feed by the livestock farmers and the expected significant production increases by several poultry farms, the total corn import is projected to further increase at least 4.5 million MT in MY 2015/16.

Oct 2013-Dec 2014

Oct 2014-Dec 2015

Quantity

Market Share

Quantity

Market Share

Brazil

647,914

82.1%

383,564

40.3%

U.S.

135,286

17.1%

246,036

25.9%

Argentina

6,349

0.8%

322,040

33.8%

Total

789,549

100%

951,640

100%

Source: Global Trade Atlas

DDGS and CGS Imports:

Dried distillers grain with soluble (DDGS) and corn gluten feed (CGF) are two of the 31 animal feed ingredients that are eligible to receive Saudi government import subsidies. Importers of DDGS and CGF receive about $134.67 and $125.87 per MT as import subsidies, respectively. To qualify for the subsidies, DDGS shipments must have at minimum 23 percent protein content and 2,800 energy units per MT. For CGF, the minimum protein requirement is 20 percent and energy requirement is 2,700 units per MT. According to USGC, an estimated 15,000 tons of DDGS is expected to be exported to Saudi Arabia by March 2015.

Marketing:

The U.S. Grain Council (USGC) has been active in the Saudi market for the past few years conducting various activities to educate Saudi poultry farms, dairy producers and feed millers about the benefits of using DGGS, CGF and sorghum in their animal feed formulations. In summer of 2011, the USGC's successful efforts were the main factor in convincing the Saudi government to include DDGS and CGF on the list of imported feed ingredients eligible for import subsidy. This has presented a good opportunity for U.S. DDGS and CGF exports in the Saudi market. The organization conducts several trade servicing visits to Saudi Arabia annually and provides technical consultation to explain the benefits of including DDGS in livestock and poultry feed formulas. The USGC also sponsors delegations of Saudi buyers to attend regional and U.S. feed grain conferences, as well as organizes field visits to major U.S. corn producing states for Saudi feed grains buyers.

Production, Supply and Demand Data Statistics:

Corn

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

Oct 2015

Saudi Arabia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

16

14

16

14

0

14

Beginning Stocks

358

380

388

514

0

644

Production

80

80

80

80

0

80

MY Imports

2,600

2,684

2,900

3,500

0

4,500

TY Imports

2,600

2,684

2,900

3,500

0

4,500

TY Imp. from U.S.

1,031

1,033

0

1,200

0

1,700

Total Supply

3,038

3,144

3,368

4,094

0

5,224

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

2,500

2,500

2,800

3,300

0

4,200

FSI Consumption

150

130

200

150

0

250

Total Consumption

2,650

2,630

3,000

3,450

0

4,450

Ending Stocks

388

514

368

644

0

774

Total Distribution

3,038

3,144

3,368

4,094

0

5,224

1000 HA, 1000 MT, MT/HA