February 26, 2018

Mexico Cracks Open the Door for Corn Imports from Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Mexico is the largest buyer of U.S. corn and the second largest buyer of U.S. soybeans, but uncertainly over the future of NAFTA has caused buyers in Mexico to start looking to South America as a way to diversify their sources of corn.

Mexico purchased 583,000 tons of Brazilian corn in 2017, which represented an increase of 970% over 2016 and all of the corn imports occurred during the last four months of 2017. Prior to 2017, virtually no Brazilian corn was imported to Mexico.

Last summer, it was reported that a delegation of Mexican officials and scientists traveled to Brazil to start the process of establishing phytosanitary protocols for importing Brazilian grain. There were also veterinarians in the group that started inspections of Brazilian meat processing facilities as the first step to begin importing Brazilian meat products.

Apparently, the "pump has been primed" so to speak because according to government and commercial officials, the corn imports continued in January of this year with 100,000 tons of imported corn compared to zero imports in January of 2017.

Some Mexican companies indicated that even if Brazilian corn was a little more expensive than U.S. corn, it still might be better to import Brazilian corn due to the possibility of increased tariffs placed on U.S. corn in response to increased tariffs on Mexican goods entering the U.S. Brazilian officials feel that once the door to importing Brazilian grain and meat is open, it is only going to open wider in the years ahead.

In fact, there are many analysts, including myself, that feel that Brazil will eventually overtake the United States as the number one corn exporter in the world. Corn would then join a long list of other agricultural products where Brazil either leads the world in exports or is one of the primary exporters including: soybeans, coffee, sugar, orange juice, tobacco, beef, poultry, and pork.

Brazil's agricultural production can continue to expand into the future due to having ample land that can be brought into production, a suitable climate, abundant water resources, a robust agricultural research service, and farmers and ranchers with agricultural production know-how.