Mexico's grain, feed production decrease

by World Grain Staff
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WASHINGTON, D.C., U.S. — Mexico’s new market year 2015-16 (July/June) wheat harvested area and production forecasts have been revised slightly downward from U.S. Department of Agriculture (USDA) forecasts based on updated information from Mexico’s Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Foodstuffs (SAGARPA) as of Dec. 31, 2015.

The new wheat ending stocks estimate for market year 2015-16 is 555,000 tonnes lower than the USDA’s estimate as a result of lower-than-expected production.

Mexico’s total sorghum production and harvested area estimates has lowered for market year 2015-16 due to the severe infestation of the sugarcane aphid (SCA) in Guanajuato, the second most important producer state in the country, the USDA’s Foreign Agricultural Service (FAS) reported on Jan. 26.

According to official sources, Guanajuato’s sorghum production was reduced by at least 43% from the initial production estimate of the 2015 spring/summer crop cycle (1.5 million tonnes). These sources stated that the SCA infestation produced a reduction in crop yields, harvest efficiency reduction, and in some areas severe crop loses. Guanajuato alone accounts for approximately 36% of Mexico’s spring/summer crop cycle. Similarly, FAS has decreased the estimates for harvested area based on the most recent data from SAGARPA.

In market year 2015-16, the sorghum total consumption estimate has also been revised downward compared to the USDA figure, based on information from private sources who expect the livestock sector to see sorghum prices as less attractive in this marketing year. These contacts estimate that the lower domestic production than was previously anticipated would increase domestic sorghum prices further and magnify a decrease in demand for animal feed.

The report estimated ending stocks for market year 2015-16 have been lowered in response to reduced production.

Mexico’s corn production and area harvested estimates for market year 2015-16 (October to September) have remained unchanged, based on updated official data from SAGARPA.

Despite media reports that stated Sinaloa’s corn production was negatively impacted by cooler weather registered in late December 2015, official sources stated that the damages were not significant.

In addition, it is estimated that Sinaloa corn growers would plant approximately 488,000 hectares in the 2015-16 fall/winter crop cycle. Sinaloa continues to be the main source of commercial white corn production in Mexico for the fall/winter crop cycle, representing approximately 70% of total fall/winter crop production.

Mexico’s total corn import estimate for market year 2015-16 has been revised slightly upward from 11.3 million tonnes. Private and official sources stated that Mexican feed grain importers have opted to import higher levels of feed corn instead of sorghum, as the price difference has continued to be more favorable to corn in the last few months.

Moreover, it is expected this trend will continue for the rest of the marketing year. Similarly, other key corn importers, such as starch companies, have argued that due to the reduced domestic supply as well as the excess of humidity on much of the domestic yellow corn crop, they would rather import U.S. yellow corn during the rest of this marketing year.

Mexico’s total corn domestic feed consumption estimate for market year 2015-16 has been revised upward, based on current industry information which reflects the substitution from sorghum to corn for the livestock sector during this marketing year.

The livestock sector, mainly poultry and hog production, consume corn primarily in the form of mixtures and feed concentrates. Private sources stated that the expectation of continued low corn prices compared to alternative feed stuffs should encourage more corn use in livestock feed rations. Additionally, feed consumption is expected to shift from sorghum to corn due to the lower-than-previously estimated domestic sorghum production.

In comparison with the USDA estimate, the ending stock estimate for market year 2015-16 is slightly lower at 3.3 million tonnes, due to higher than previously estimated domestic consumption.

The total rice production estimate for market year 2015-16 (October to September) has been revised slightly downward to 195,000 tonnes (rough production) reflecting the most recent data from SAGARPA as of Dec. 31, 2015. The decrease in rough rice production is equivalent to 134,000 tonnes of milled rice. Official sources indicated that rice output was mainly decreased due to lower-than-expected harvested area in the state of Tabasco. Reportedly, the adverse weather conditions caused by a cold front in December 2015 damaged approximately 1,000 hectares of Tabasco’s rice planted area for the 2015 spring/summer crop cycle.

As a result of new domestic production information, the market year 2015-16 ending stocks estimate has been decreased to 113,000 tonnes.

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