Dive Brief:
- Mexico is expected to import a record amount of U.S. corn as intense drought threatens local production, the Department of Agriculture said Friday.
- The U.S. forecasted 20.6 million tons of corn to Mexico in the 2023/24 marketing year. Corn inspected for export to Mexico totals 9.4 million tons this marketing year, 38% above the five-year average.
- Limited water supply has depleted corn supply and fueled substantial imports. As the U.S. exports more corn to Mexico, demand from top commodity buyer China has plunged due to a bumper harvest in Brazil.
Dive Insight:
U.S. corn exports are shifting away from China and toward Mexico as consumer demand for livestock products continues to support feed demand south of the border.
Record corn production has boosted prospects for U.S. corn exporters as larger supplies make prices more competitive. And, as China makes substantial purchases from Brazil, the U.S. has an opportunity to supply previously untapped markets. A heated dispute between the U.S. and Mexico over Mexico’s proposal to curb genetically modified corn imports was expected to put a dent in exports to the country.
"Higher Brazil shipments to China have reduced supplies available to other buyers, presenting new opportunities for U.S. exporters to backfill markets supplied by Brazil last year, while also enabling U.S. trade to further support record demand in Mexico," the USDA said.
U.S. exporters have seen sales recover in Colombia, Japan, South Korea and Taiwan. However, competition could increase as Argentina rebounds from a significant drought.
Close to 60% of Mexico is experiencing moderate to exceptional drought, leading to water restrictions in the crowded Mexico City. In the major corn-producing state of Jalisco, the initial harvest "was reported as almost a complete loss," according to the USDA.
