July Grain Update

An Expert's View about Agriculture and Animal Husbandry in Mexico

Last updated: 19 Aug 2011

The Post/New marketing year (MY) 2010/11 (October/September) estimates of corn and sorghum production are reduced from USDA/Official estimates due to new information from Government of Mexico (GOM) and industry sources.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 7/25/2011 GAIN Report Number: MX1059 Mexico Grain and Feed Update July Update for Corn, Sorghum, and Wheat Approved By: Carlos Gonzalez Prepared By: Benjamin Juarez and Adam Branson Report Highlights: The Post/New marketing year (MY) 2010/11 (October/September) estimates of corn and sorghum production are reduced from USDA/Official estimates due to new information from Government of Mexico (GOM) and industry sources. MY2011/12 corn and sorghum forecasts remain unchanged from USDA/Official forecasts. MY2011/12 (July/June) wheat production is forecast lower than the USDA/Official forecast based on lower planted area in the 2011 spring/summer planting cycle as unfavorably dry conditions during planting encouraged producers to switch to alternate crops. Post: Commodities: Mexico City Corn Sorghum Wheat Wheat, Durum Executive Summary: Corn Production The Post/New total corn production volume estimate for MY2010/11 (October/September) has been revised downward from the USDA/Official estimate. The Post/New estimate is based on information from private and official sources. Sources indicated that the preliminary final production result for the 2010 spring/summer crop cycle was lower than anticipated due to poor weather conditions and that, although production dropped as compared to the previous year, the production obtained from areas replanted in Sinaloa after the February 2011 freeze was greater than anticipated as yield estimates were higher than earlier indications. The Secretariat of Agriculture, Livestock, Rural Development, Fishery, and Food (SAGARPA) released its preliminary final production results for the 2010 spring/summer crop cycle and the results were lower than anticipated. However, industry contacts indicate that although bad, the preliminary estimates are overly pessimistic about production and contacts anticipate that the final production estimate could increase. Sources had anticipated that Sinaloa fall/winter 2010/11 production would reach no more than 1.6 or 1.7 million metric tons (MMT) due to several adverse factors, such as heat stress, pest infestations, and use of seed varieties not suitable to the area. However, crop damage due to these factors is considered less than initially forecast. Official sources stated that the damage due to pest infestations was lower than anticipated because initial samples were taken at the perimeter of cornfields and were not accurate reflections of the entire corn planted area. Private and official sources now report that Sinaloa corn production may reach 2.2 MMT. This includes area that was replanted after the February 2011 freeze and area that survived the freeze. Despite the improved outlook in Sinaloa, the lower 2010 spring/summer estimate suggests that production is lower than the Post/Old and USDA/Official estimate. Consumption The Post/New total corn consumption estimate for feed and residual use for MY2010/11 is identical to USDA/Official data. The estimate has been reduced, however, in comparison with the Post/Old estimate based on new information from private sources. These sources stated that feed consumption is expected to shift from corn to sorghum and DDGS due to lower-than-previously estimated domestic corn production and higher prices. Trade In comparison with the USDA/Official estimate, the Post/New import estimate for MY2010/11 has been MX1059 July Update for Corn, Sorghum, and Wheat Page 2 decreased to 8.3 MMT because of new industry information and trade data. Industry sources indicated that the pace of the corn imports in the first eight months of this marketing year has been lower than expected due to unattractive international prices. Moreover, it is expected that the trend will continue over the rest of the marketing year, as the reduction in the domestic production for the 2010/11 fall/winter cycle will be lower-than-previously estimated (see Corn Production section). Stocks In comparison with the USDA/Official estimate, the Post/New ending stock estimate for MY2010/11 is slightly higher at 1.5 MMT. This figure is identical to the Post/Old estimate. The difference is due to the Post carryover estimate for the previous year (MY2009/10), which is also higher than the USDA/Official estimate. Sorghum Production The Post/New sorghum production estimate for MY2010/11 (October/September) has been revised downward to 6.34 MMT from the USDA/Official estimate based on updated official data from SAGARPA. Official sources stated that drought-like conditions during critical phases of the sorghum crop development in Tamaulipas (which accounts for approximately 80 percent of the fall/winter cycle) resulted in irreversible yield losses. The production estimates for MY2009/10 and MY2011/12 remain unchanged. Trade The Post/New import estimate for MY2010/11 has been lowered so that it is identical to the USDA/Official estimate. This is based on information from industry sources and analysis of the rate of imports entering the country from the United States. Stocks Ending stocks for MY2010/11 have been revised downward to 123,000 MT due to lower-than- previously estimated domestic production for this year. This is reflected in the downward adjustment to MY2011/12 carryover as well. Wheat Production The Post/New MY2011/12 (July/June) wheat harvested area and production forecasts have been revised downward from USDA/Official forecasts based on updated information from official GOM sources. Due to unfavorably dry weather conditions, farmers in the states of Puebla, Tlaxcala, and Hidalgo were unable to successfully plant their crop because of a lack of rain during the 2011 spring/summer crop cycle. Instead, sources indicate these farmers planted short cycle alternative forage crops. Trade The Post/New wheat export estimate for MY2010/11 has been revised slightly upward from USDA/Official estimate to 625,000 MT based on preliminary official data covering the first 10 months of the marketing year from SAGARPA and the General Customs Directorate of the Finance Secretariat (SHCP). The Post/New total wheat import forecast for MY2011/12 has been revised upward from USDA/Official data to 3.6 MMT due to lower-than-previously estimated domestic wheat production. MX1059 July Update for Corn, Sorghum, and Wheat Page 3 Stocks The Post/New MY2010/11 ending stocks estimate has been reduced from the USDA/Official estimate to 384,000 MT due to higher-than-previously estimated exports. This is reflected in the downward adjustment to MY2011/12 carry over as well. Production, Supply and Demand Data Statistics: Table 1. Mexico: Corn Production, Supply and Demand for MY 2009/10 to 2011/12 Corn Mexico 2009/2010 2010/2011 2011/2012 Market Year Begin: Oct 2009 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 6,280 6,280 7,000 7,000 7,050 7,050 Beginning Stocks 3,559 3,559 1,389 1,409 1,489 1,509 Production 20,374 20,374 20,900 20,600 24,000 24,000 MY Imports 8,298 8,108 8,000 8,300 9,200 9,200 TY Imports 8,298 8,108 8,000 8,300 9,200 9,200 TY Imp. from U.S. 8,254 8,108 0 8,300 0 9,200 Total Supply 32,231 32,041 30,289 30,309 34,689 34,709 MY Exports 642 632 100 100 100 100 TY Exports 642 632 100 100 100 100 Feed and Residual 14,200 14,000 13,100 13,100 15,800 15,800 FSI Consumption 16,000 16,000 15,600 15,600 16,300 16,300 Total Consumption 30,200 30,000 28,700 28,700 32,100 32,100 Ending Stocks 1,389 1,409 1,489 1,509 2,489 2,509 Total Distribution 32,231 32,041 30,289 30,309 34,689 34,709 1000 HA, 1000 MT, MT/HA Table 2. Mexico: Sorghum Production, Supply and Demand for MY 2009/10 to 2011/12 Sorghum Mexico 2009/2010 2010/2011 2011/2012 Market Year Begin: Oct 2009 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 1,616 1,616 1,722 1,700 1,750 1,750 Beginning Stocks 1,336 1,336 414 337 214 123 Production 6,250 6,250 6,600 6,340 6,800 6,800 MY Imports 2,528 2,451 2,200 2,200 2,300 2,300 TY Imports 2,528 2,451 2,200 2,200 2,300 2,300 TY Imp. from U.S. 2,528 2,451 0 2,200 0 2,300 Total Supply 10,114 10,037 9,214 8,877 9,314 9,223 MY Exports 0 0 0 0 0 0 TY Exports 0 0 0 0 0 0 Feed and Residual 9,600 9,600 8,900 8,900 8,900 8,900 FSI Consumption 100 100 100 100 100 100 Total Consumption 9,700 9,700 9,000 9,000 9,000 9,000 Ending Stocks 414 337 214 123 314 223 Total Distribution 10,114 10,037 9,214 9,123 9,314 9,223 1000 HA, 1000 MT, MT/HA Table 3. Mexico: Wheat Production, Supply and Demand for MY 2009/10 to 2011/12 Wheat Mexico 2009/2010 2010/2011 2011/2012 MX1059 July Update for Corn, Sorghum, and Wheat Page 4 Market Year Begin: Jul 2009 Market Year Begin: Jul 2010 Market Year Begin: Jul 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 828 828 681 681 720 680 Beginning Stocks 315 315 520 555 399 384 Production 4,148 4,148 3,679 3,679 3,750 3,650 MY Imports 3,196 3,231 3,400 3,400 3,500 3,600 TY Imports 3,196 3,231 3,400 3,400 3,500 3,600 TY Imp. from U.S. 2,152 2,242 0 2,900 0 3,000 Total Supply 7,659 7,694 7,599 7,634 7,649 7,634 MY Exports 839 839 600 625 700 700 TY Exports 839 839 600 625 700 700 Feed and Residual 500 500 600 625 250 250 FSI Consumption 5,800 5,800 6,000 6,000 6,200 6,200 Total Consumption 6,300 6,300 6,600 6,625 6,450 6,450 Ending Stocks 520 555 399 384 499 484 Total Distribution 7,659 7,694 7,599 7,634 7,649 7,634 1000 HA, 1000 MT, MT/HA Figure 1. Mexico: Mexican Corn and Tortilla Prices Trend Higher, but U.S. Corn Prices Stabilizing Author Defined: For More Information MX1059 July Update for Corn, Sorghum, and Wheat Page 5 FAS/Mexico Web Site: We are available at www.mexico-usda.com or visit the FAS headquarters' home page at www.fas.usda.gov for a complete selection of FAS worldwide agricultural reporting. FAS/Mexico YouTube Channel: Catch the latest videos of FAS Mexico at work http://www.youtube.com/user/ATOMexicoCity Report Number Subject Date Submitted MX1048 Grain and Feed June Update 6/20/2011 MX1043 Grain and Feed May Update -- Sorghum Situation 5/25/2011 MX1033 Grain and Feed April Update 4/29/2011 MX1017 2011 Grain and Feed Annual 3/14/2011 MX1012 Hard Freeze Damages Sinaloa Corn and Produce 2/11/2011 MX1006 January Update for Corn and Rice 1/28/2011 Useful Mexican Web Sites: Mexico's equivalent to the U.S. Department of Agriculture (SAGARPA) can be found at www.sagarpa.gob.mx , equivalent to the U.S. Department of Commerce (SE) can be found at www.economia.gob.mx and equivalent to the U.S. Food and Drug Administration (SALUD) can be found at www.salud.gob.mx. These web sites are mentioned for the readers' convenience but USDA does NOT in any way endorse, guarantee the accuracy of, or necessarily concur with, the information contained on the mentioned sites. MX1059 July Update for Corn, Sorghum, and Wheat Page 6
Posted: 17 August 2011, last updated 19 August 2011

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