NUMEROUS FACTORS SAID POINT TO USSR CORN BUYING

  A greater than anticipated need,
  competitive prices and political motivations could be sparking
  Soviet interest in U.S. corn, industry and government officials
  said.
      As rumors circulated through grain markets today that the
  Soviet Union has purchased an additional 1.5 mln tonnes of U.S.
  corn, industry and government sources noted a number of factors
  that make Soviet buying of U.S. corn likely.
      First, there are supply concerns. Some trade sources said
  recent speculation has been that last year's Soviet grain crop
  be revised to only 190 mln tonnes, rather than the 210 mln
  announced, therby increasing the Soviet need for grain.
      A drop in Argentine corn crop prospects could also affect
  Soviet corn buying, an Agriculture Department source said.
      Dry weather in Argentina -- a major corn supplier to the
  USSR -- and reported crop problems prompted USDA to lower its
  Argentine 1986/87 corn crop estimate this week to 11.0 mln
  tonnes, down from 11.5 mln. Argentina corn exports were also
  cut by 500,000 tonnes to 6.8 mln tonnes.
      Argentina has already committed four mln tonnes of this
  year's corn for export, a USDA official said, with two mln
  tonnes of that booked for April-June delivery to the USSR.
      "Significant downside potential" still exists for the
  Argentine crop, the official said, which will decrease the
  amount of additional corn that country can sell to Moscow.
      "If the Soviet needs are greater than we have been
  thinking, then they might need more than what Argentina can
  provide during the April to June period," he said.
      Current competitive prices for U.S. corn have also sparked
  Soviet buying.
      U.S. corn was reported to be selling on the world market
  earlier this week for around 71 dlrs per tonne, Argentine corn
  for 67 dlrs -- a very competitive price spread, U.S. and Soviet
  sources said.
      "This price difference makes American corn competitive,"
  Albert Melnikov, commercial counselor for the Soviet Union,
  told Reuters.
      Impending crop problems in Argentina will likely cause
  those prices to rise, and with the recently strong U.S. corn
  futures prices, the Soviets might feel corn prices have
  bottomed and that this is a good time to buy, sources said.
      Finally, some industry sources said that by buying the
  minimum amount of corn guaranteed under the U.S./USSR grains
  agreement (four mln tonnes), the Soviet Union may be hoping to
  convince the USDA to offer Moscow a subsidy on wheat.
      In an inteview with Reuters this week, USDA secretary
  Richard Lyng said that no decision had been made on a wheat
  subsidy offer, but that such an offer had not been ruled out.
  

