CHICAGO/SAO PAULO (Reuters) - The grains market is abuzz with speculation that drought-hit Brazil has bought its first major cargo of U.S. corn in two decades, as the world’s third-largest corn grower scrambles to secure feedstock with no sign of the supply crisis easing.

Rows of corn wait to be harvested in a field in Minooka, Illinois, September 24, 2014.. REUTERS/Jim Young

The talk comes after Brazil, Latin America’s largest economy, last week scrapped import taxes on corn from countries outside the Mercosur trade bloc, its latest effort to curb record domestic prices and boost supplies.

Soaring exports have starved the nation’s consumers, like poultry producers, while farmers worry the prolonged dry spell could damage the upcoming crop due to be harvested in June.

Bumper prices and the duty suspension have triggered a flurry of dealmaking as the supply crunch offers traders in the region an unexpected, and unusual, new market for the world’s excess corn.

About 700,000 tonnes of corn have been booked from Argentina and Paraguay, which enjoy a tariff-free trade with Brazil under the Mercosur customs agreement.

But export sales data on Wednesday showed an undisclosed buyer had booked a 136,000-tonne U.S. corn purchase, sparking widespread speculation among grain traders that Brazil was the buyer.

If so, the world’s No. 2 corn exporter would be reaching beyond its traditional suppliers Argentina and Paraguay in what would be the nation’s largest U.S. corn purchase since 1995.

The dealmaking underscores how the growing crisis in Brazil is upending regional trade flows and forcing buyers to extend their search for alternative supplies.

Marden Vasconcelos, vice president of local poultry association Aceav, said he was offered containers of corn from a major U.S. merchant.

“I was surprised, because I always thought the shipping price of a container would be higher, but it opens up another possibility for our imports,” he said.

U.S. Department of Agriculture export inspections data may reveal the destination as soon as Monday, though traders said the disclosure would more likely come later as shippers may need more time to finalize the details of the transaction before physically loading a vessel.

FIRST IN 20 YEARS

As much as 700,000 tonnes of U.S. corn could get shipped to Brazil over the next few months before its next crop is harvested, traders estimated.

That’s tiny compared with the tens of million of tonnes the United States and Brazil, the world’s top corn exporters, ship abroad each year and the 122 million tonnes in annual global corn trade.

But it’s far in excess of U.S. volumes heading to Brazil over the past 20 years, Brazilian government data shows.

Early calculations indicate U.S. corn is competitive with Argentine material because of the vast oversupply and ocean freight rates are at historic lows.

Tariff-free bulk shipments from the U.S. Gulf Coast to northeast Brazil, where several smaller poultry producers are located, are estimated to be about $6 per tonne cheaper than Argentine imports and at least $35 per tonne less than domestic corn, Reuters and industry data showed.

“We were closing the deal for the third Argentine ship when we heard about the tax cut. We decided to wait and see how the prices go,” said Vasconcelos.

The unusual trade route has been a challenge even for experienced U.S. merchants and Brazilian buyers, who must ensure grain has all regulatory clearances and does not contain unapproved biotech varieties, grain traders said.

Importing an entire ship loaded with corn is the kind of business only a handful of local poultry producers can handle, so smaller amounts arriving by containers can be an alternative, specialists said.

Smaller buyers in northeast Brazil, home to most of the region’s poultry farms, are used to buying only domestic grain from familiar suppliers, which can further complicate the process, they said.

“There’s a lot of corn here in the U.S. and if it makes sense economically let them bring it,” said Pedro Dejneka, president of consultancy AGR Brasil in Chicago.