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Montevideo, November 13th 2018 - 04:48 UTC

Mexico buying more Brazilian corn over concern with NAFTA negotiations

Friday, February 23rd 2018 - 09:21 UTC
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Mexican buyers imported a total of more than 583,000 metric tons of Brazilian corn last year – a 970% jump over 2016, shows data from Mexico’s SIAPm Mexico’s SIAP Mexican buyers imported a total of more than 583,000 metric tons of Brazilian corn last year – a 970% jump over 2016, shows data from Mexico’s SIAPm Mexico’s SIAP
U.S. Agriculture Secretary Sonny Perdue said he does not see a threat from Brazil to U.S. corn sales to Mexico because the U.S. has the advantage of proximity U.S. Agriculture Secretary Sonny Perdue said he does not see a threat from Brazil to U.S. corn sales to Mexico because the U.S. has the advantage of proximity

Mexican buyers imported ten times more corn from Brazil last year amid concern that NAFTA renegotiations could disrupt their U.S. supplies, according to government data and top grains merchants. Mexico is on track to buy more Brazilian corn in 2018, which would hurt a U.S. agricultural sector already struggling with low grains prices and the rising competitive threat from South America.

U.S. farmers, food processors and grain traders have spent months trying to prevent trade relationships from falling apart if the North American Free Trade Agreement implodes. They are trying to protect more than US$19 billion in sales to Mexican buyers of everything from corn and soybeans to dairy and poultry.

Despite their efforts, South American corn shipments to Mexico are surging. Mexican buyers imported a total of more than 583,000 metric tons of Brazilian corn last year – a 970% jump over 2016, according to data from Mexico’s Agrifood and Fishery Information Service (SIAP).

The purchases all came in the last four months of last year. They followed visits by Mexican government officials and grains buyers to Brazil and Argentina to explore alternative supply options in the months after U.S. President Donald Trump took office and threatened to tear up the trade pact.

Mexico has long been the top importer of U.S. corn, and is the second largest buyer of U.S. soybeans, giving Mexico leverage in corn-belt states that are staunch Trump supporters but also strongly back the trade status quo.

Mexico’s Economy Minister Ildefonso Guajardo, who is overseeing Mexico’s NAFTA negotiating team, encouraged the country’s major grain buyers last year to explore South American corn to strengthen his hand at the negotiating table, saying the country needed a “Plan B” in case Washington pulled out of the trade deal.

Cheaper prices for Brazilian corn drove some of purchases by Mexican buyers. But in other cases, they bought Brazilian corn even when it cost more than U.S. supplies.

“We bought from Brazil for two reasons,” said Edmundo Miranda, commercial director of Grupo Gramosa, one of Mexico’s top grains merchants. “One, because it was competitive. Two, to see how practical and profitable it was to buy from Brazil or Argentina given the possibility of trade tariffs because of NAFTA renegotiations.”

Gramosa and its domestic rival Comercializadora Portimex didn’t import any Brazilian corn in 2016. But last year, they imported nearly 260,000 metric tons of it - worth about US$44 million at current prices - between September and December. The deals have not been previously reported.

However U.S. Agriculture Secretary Sonny Perdue said Thursday that he does not see a threat from Brazil to U.S. corn sales to Mexico because the U.S. has the advantage of proximity and logistics.

“We have a tremendous logistical advantage to sell to Mexico, with railways going directly from the corn area to Mexico,” said Perdue, speaking at the USDA Agricultural Outlook Forum, in Arlington, Virginia.

He acknowledged Brazil has the advantage of being able to grow two crops per year because of more favorable weather.

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    Aren't the drugs more lucrative than corn?

    Feb 25th, 2018 - 01:01 pm 0
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