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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed


07 November 2013

USDA GAIN: Mexico Grain and Feed UpdateUSDA GAIN: Mexico Grain and Feed Update

Corn production is likely to contract slightly in marketing year (MY) 2013/14 (October/September) to 21.7MMT mostly due of damages brought on by a recent hurricane and tropical storm. Wheat production is down for MY 2013/14 (July/June) also mainly due to adverse weather conditions. Sorghum, rice and dry bean production are all forecast to be up in MY 2013/14 due to favorable weather conditions and other economic factors. Mexico’s Agriculture Secretary recently announced the Administration’s goal for the country to eventually become self-sufficient in yellow corn production.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Post:

Mexico City

Corn

Production:

Total Mexican corn production estimate for MY2013/14 (October/September) has been revised downward from USDA/Official estimate to 21.7 million metric tons (MMT), due to more complete data from the Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Food (SAGARPA). Despite a higher-than-expected harvested area, the extremely unfavorable weather conditions provoked by hurricane Manuel and tropical storm Ingrid last September, has lessened production expectations. Both meteorological phenomenon caused extensive damaged when the storms tore through several of Mexico’s corn regions, particularly in Guerrero, Michoacán and Tamaulipas. According to official sources in Guerrero, for example, the storms damaged 103,000 hectares of corn. As result, it is expected that corn production in the state of Guerrero could reach 1.2 MMT in the 2013 spring/summer crop cycle compared with 1.5 MMT obtained the same season last year. In total, SAGARPA estimates that the 2013 spring/summer crop, which is mainly harvested in December, could reach 16.9 MMT. At the same time, the expectation for the upcoming 2013/14 fall/winter season crop could reach 4.8 MMT, considering a planted area of 975,000 hectares (has). The Post/New total production and harvested area estimates for the MY 2012/13 have been adjusted slightly upward based on SAGARPA final information.

According to Agriculture Secretary, Enrique Martinez, one of the goals of the current administration is for Mexico to eventually become self-sufficient in domestic yellow corn production and thereby eliminating the need to rely heavily on imports. Recently, Secretary Martinez stated that due to the white corn-surplus in Mexico, SAGARPA is implementing conversion schemes (i.e. government supports) to help prevent falling prices and the adverse impact on grower livelihoods. The Secretary recently pointed out “we have a surplus of products such as white corn, and are making efforts to convince corn growers to plant part of their crop to yellow corn because we are now importing nearly 8.0 MMT of yellow corn annually.” As a result of the Administration’s initiative, SAGARPA is in the process of conducting talks with growers in Sinaloa, a major corn producing state, about substituting white corn production with yellow corn production. SAGARPA’s initial goal for the upcoming 2013/2014 fall/winter crop cycle is to substitute the estimated production of 2 MMT of white corn with yellow corn thereby increasing Sinaloa’s total estimated yellow corn production to 4 MMT.

Trade:

The Post/New total corn import estimates for MY2012/13 have been revised upward from official USDA/Official estimate based on final official information from the General Customs Directorate of the Secretariat of Finance (SHCP) and SAGARPA. It should be noted that this information is more updated than the data from Global Trade Atlas available information. Similarly, the Post/New export estimate for MY2012/13 was revised upward from USDA/Official figures to reflect final data from the same Mexican official sources.

During a recent hearing with lawmakers of Mexico’s Lower House, Agriculture Secretary, Enrique Martinez, stated that the Mexican government is ready to vacate the 2008 decree allowing corn imports from countries that Mexico does not have free trade agreements, such as South Africa. Martinez pointed out that with the expectation of corn overproduction next year, the decree could generate market price distortions in the domestic market. Mexico imported approximately 1.0 MMT of white corn from South Africa in the last two years, with zero import tariffs under that decree, to cope with the adverse weather conditions that affected domestic corn production.

Stocks:

The Post/New ending stocks estimate for MY 2013/14 is lower than the USDA/Official estimate (1.611 MMT) as a result of lower-than-previously estimated domestic production. Also, the Post/New ending stocks for MY 2012/13 have been revised downward from USDA/Official estimate due to higher-than-previously estimated exports.

Sorghum

Production:

The Post/New sorghum production estimate for MY 2013/14 (October/September) has been revised upward to 7.1 MMT from the USDA/Official estimate based on updated official data from SAGARPA. Government contacts stated that total planted area for the upcoming 2013/14 fall/winter crop cycle is expected to be higher than initially forecast due to the rains generated by the two hurricanes that hit landfall on opposite coasts in September 2013. Although both hurricanes caused severe flooding, destroyed roads and claimed lives, it also helped to recharge many low reservoirs, which have been operated at less than 50 percent capacity for almost three years. Official sources stated with that level in the water reservoirs and higher land moisture, sorghum grower's planting intentions should increase. It should be noted that tropical storms are an important source for replenishing water reservoirs across Mexico, with reservoirs being recharged from tropical storms from both the Atlantic and Pacific oceans from July through September. The Post/New production estimate and harvested area for MY 2012/13 have been increased slightly from USDA/Official based on updated official data from SAGARPA.

Trade:

The Post/New total sorghum import forecast for MY 2013/14 has been revised downward from USDA/Official data to 3.2 MMT, due to higher-than-previously estimated domestic sorghum production. Similarly, the Post/New import estimate for MY 2012/13 was revised downward from USDA/Official estimate to 1.86 MMT, based on final official data from the General Customs Directorate of the Secretariat of Finance (SHCP) and SAGARPA. It should be noted that this information is more updated than the data from Global Trade Atlas available information.

Stocks:

The ending stock estimate for MY 2013/14 has been increased from USDA/Official estimates, due to higher-than-previously estimated domestic production. At the same time, Post ending stocks estimate for MY 2012/13 has been revised upward from USDA/Official data to 353,000 MT due to higher-than-previously estimated domestic production for this year.

Rice

Production:

The Post/New total rice production estimate for MY 2013/14 (October to September) has been revised upward approximately 6 percent from USDA/Official estimates to 188,000 MT (rough production) reflecting the most recent data from SAGARPA. The increase in rough rice production is equivalent to 129,000 MT of milled rice. According to industry sources, rice output was increased due to higher yields-than-previously estimated. Reportedly, the main rice producing states such as Nayarit, Veracruz, Tabasco and Michoacán have continued planting in regions with consistently higher yield levels. In addition, some state governments have implemented support programs for rice growers. In Veracruz, for example, the 2013 Rice State Program for Irrigated and Non-irrigated crop cycles was recently implemented. Through this program, the state government has provided certified seed, fertilizer, machinery and equipment for production, harvesting and drying. As result, it is expected that in the 2013 spring/summer crop cycle yields in Veracruz could increase to 6.367 MT/Ha from 6.0 MT/Ha obtained the same crop cycle last year. The production estimate for MY 2012/2013 has been adjusted slightly upward from USDA/Official estimates based on SAGARPA final information.

Trade:

In comparison with the USDA/Official estimate, the Post/New import estimate for MY2012/13 has been adjusted downward, based on final data from the General Customs Directorate of the Secretariat of Finance (SHCP) and SAGARPA. It should be noted that this information is more updated than the data from Global Trade Atlas available information.

Stocks:

As a result of new trade information, the Post/New MY 2012/13 ending stocks estimates have been decreased from the USDA/Official estimate. It was reflected in the carry over for the MY2013/14, which was also adjusted downward.

Wheat

Production:

Post's MY 2013/14 (July/June) wheat harvested area and production forecasts have been revised downward from USDA/Official forecasts based on updated information from official Government of Mexico (GOM) sources, which reflects lower-than-previously estimated harvested area. Industry contacts stated the 2013 Spring/Summer crop was adversely affected due to a freeze in September 2013, mainly in the state of Tlaxcala. The GOM sources pointed out that the 2013 freeze damaged the wheat crop during the grain-filling/ripening stage of growth, which also negatively affected yields in the state of Tlaxcala.

Trade:

Post's wheat import estimate for MY 2012/13 has increased by 207,000 MT from the USDA/Official estimate. These figures are based on final data from the Global Trade Atlas. Similarly, the MY2012/13 export estimate has been revised downward reflecting final Global Trade Atlas data.

Stocks:

Post's ending stocks estimate for MY 2012/13 has been revised upward to 564,000 MT from the USDA/Official estimate, due to higher-than-previously import estimates. It was reflected in the carry over for the MY 2013/14 which was also adjusted upward. It should be noted that this level of stocks are similar to those registered on MY2011/12.

Dry Beans

Production:

The Post dry beans harvested area and production estimates for MY2013/14 (January to December) have been revised upward, reflecting the latest Mexican government official data published by SAGARPA. Official sources stated that the favorable weather conditions, with a regular rainy season since September, encouraged growers to increase planted areas of dry beans in the main producing states such as Zacatecas, Durango and San Luis Potosi. Moreover, these favorable weather conditions have impacted favorably the expected yields. Official sources now estimate that the 2013 spring/summer crop cycle will produce approximately 855,000 MT of edible beans, slightly higher than the production reached for the same crop cycle last year (810,000 MT). As usual, this spring/summer crop cycle will account for approximately 75 percent of total dry edible bean production whereas the remainder of the crop will come from the fall/winter cycle. Post total dry beans production and harvested area estimates for MY 2012/13 have been adjusted slightly upward based on SAGARPA final information.

Trade:

The Post dry bean import and export estimate for MY2013/14 have been revised downward and upward, respectively, based on updated official information from the General Customs Directorate of the Secretariat of Finance (SHCP) and SAGARPA, as of September 30, 2013. Also, the Post import estimate for MY2012/13 was revised slightly upward to 232,000 MT, based on final official data.

On October 22, 2013 SAGARPA published a press release about dry beans, with several points, among them the following:

  • SAGARPA announced a scheme of assistance to avoid market distortions and safeguarding dry beans growers, mainly in the states of Zacatecas, Chihuahua and Durango.

  • SAGARPA performed an intense collaboration between dry bean growers, traders, consumers and local authorities to take preventive measures in favor of the production chain.

  • Based on the close coordination with the Secretariat of Economy (SE), and due to the enough supply of dry beans in the domestic market, it is agreed that there will be no imports of dry beans.

  • This strategy is expected to benefit growers of black and pinto beans of the aforementioned states.

According to official sources, details of the new assistance scheme will be published in Mexico’s Federal Register (“Diario Oficial”) in the next few weeks.

Regarding the statement that there will be no imports of dry beans (reportedly until the domestic dry bean crop is sold), GOM officials have informed Post that the Government of Mexico is looking to cancel the unilateral tariff rate quote (TRQ) that the SE announces every year in Mexico’s Federal Register, since 2008 (see 2012 GAIN report MX2008 “Mexico Looks to Source More Beans”). However, GOM officials advised Post that this TRQ does not apply for countries under the North America Free Trade Agreement (NAFTA) such as the United States and Canada. The Mexican officials reiterated that U.S. dry beans imports will not be suspended, as Mexico’s import tariffs on U.S. dry beans were eliminated under NAFTA since January 1, 2008.

Stocks:

Ending stocks for MY2013/14 have been revised upward to 215,000 MT due to higher-than-previously estimated domestic production for this year. Also, the Post/New ending stocks estimate for MY2012/13 is slightly higher than previous FAS/Mexico estimate. The difference is due to higher-than-previously domestic production and import estimates. This is reflected in the upward adjustment to MY2013/14 carry over as well.

November 2013

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