Sizzling corn exports to Mexico
The corn market in Mexico is hot, literally.
The same drought that devastated Texas last year hit corn production hard in Mexico and Tuesday the USDA reflected that with a boost in its estimate of corn exports to that country.
It raised its estimate of Mexican 2011-12 corn purchases to 10.5 million metric tons, up from 9.8 mmt in March. Mexico is the world’s second largest export market after Japan, which is still expected to buy 16.1 mmt this year, unchanged from the March estimate. Mexico was the only large buyer with a higher estimate.
USDA also bumped up estimates for exports to Indonesia, from 1.5 to 2 mmt. But it lowered estimates for Egypt (from 6 mmt to 5 mmt) and it shaved exports to Colombia from 3.9 mmt to 3.7 mmt. The bottom line for global exports is virtually a wash, with the number falling from 96.3 mmt last month to 96,2 in the Foreign Agricultural Service (FAS) World Corn Trade table in its April grain trade report.
A different report released Tuesday, the World Agricultural Supply and Demand Estimates (WASDE), shows ending corn stocks for the world falling from 125.53 mmt last month to 122.71 mmt.
Mexico’s shorter crop has to be part of that. The FAS cut estimates of Mexico’s corn production by 1.5 mmt this month, down to 19 mmt.
“The reduction in output is attributed to adverse weather conditions, including late rains, drought and frost that impacted the spring/summer crop, and low water reservoirs in Sinaloa impacting the fall/winter crop,” according to FAS World Agricultural Production report released Tuesday.
“The impact of the drought was worse than previously forecasted. The Secretariat of Agricultural, Livestock, Rural Development, Fisheries and Food (SAGARPA) reported that it caused high crop losses, particularly in the main producing areas of Puebla, state of Mexico, Guanajuato, and some regions of Jalisco,” the FAS report said.
The U.S. Grains Council recently reported that the effect of the drought on Mexico’s demand for feed grains is likely to last for two to three years.