(Agrimoney) – Mexico will remain highly dependent on US corn imports next season, the US Department of Agriculture’s bureau in Mexico City said.
The forecast tallies with statements from investors that Mexico’s much-vaunted drive to pivot away from US agricultural imports is unlikely to hit farmers there in the near futures.
The bureau forecast Mexican corn imports in 2017-18 flat year-on-year, at 13.40m tonnes, thanks to moribund demand and rising production.
But the US market share will be unchanged, with all but 200,000 tonnes of imported corn sourced from Mexico’s northern neighbour.
Mexican corn production is seen up 1.25m tonnes year on year, at 25.25m tonnes next season.
Threats of Mexican pivot
This forecast pours some cold water on ideas that Mexico is looking to reduce its agricultural imports from the US.
“Private sources indicated that as Mexico becomes a more attractive and sophisticated importer, some other countries that produce yellow corn, such as Brazil and Argentina, have shown interest in exporting to Mexico,” the bureau said.
And the bureau noted recent statement from the Mexican government “indicating that it has a strategic objective to increase diversification of its agricultural import suppliers”
“In the longer term, this could mean that Mexico would not rely only on US corn imports, as is currently the case,” the bureau said.
Rhetoric grows fiercer…
This rhetoric has ramped up in recent months, in response to the election of Donald Trump as US president.
Mr Trump ran in part on a mandate of renegotiating the North American Free Trade agreement, which includes Mexico, and Canada, to gain more agreeable terms for the US.
Last week Mexico’s Economy minister Ildefonso Guajardo said that any country-specific rules of origin within the North American Free Trade Agreement (NAFTA) would be “totally unacceptable”.
…but many doubt if threats have teeth
The threat of a pivot away from US grain imports is seen as a warning shot by the Mexican government, ahead of any fresh negotiations.
But many investors have shrugged off the threats, suggesting that Mexico has only limited potential to source other supplies, given the significant freight cost advantage enjoyed by US exporters to Mexico.
And the USDA’s Mexico City bureau struck a similar sanguine note, suggesting that “given that there have not been any changes to policy or economic factors, it is expected that over the mid-term at least, Mexico will remain a substantial importer of corn from the United States”.
