Miller Magazine Issue: 113 May 2019

MEXICO 83 MAY 2019 and the first half of MY 2018/19 saw a significant surge in imports from Russia, and to a lesser extent, Ukraine. This was driven by low prices for Russian wheat, and es- pecially by low shipping rates from the Black Sea. In MY 2019/20, Mexico will be open to wheat shipments from Poland and Germany for the first time. The Mexican milling industry notes that this will allow additional flexibility in terms of price and type of wheat that is available. In addition to price considerations, which are central for mills’ purchasing decisions, other influen- cing factors include protein content and homogeneity of shipments. Millers noted that different sections of a single shipment of U.S. wheat can have very different protein le- vels. On the other hand, protein levels in shipments from many other origins are more uniform. SIXTH LARGEST CORN PRODUCER IN THE WORLD Mexico’s corn production forecast for MY 2019/20 (October to September) is 27.1 MMT, with an estimated 7.3 million hectares (ha) of harvested area. Corn pro- duction for the current 2018/19 fall/winter crop cycle is estimated at 7.7 MMT, which is very similar to the previous year. Post’s total corn production estimates for MY 2017/18 and MY 2018/19 have been revised upward from the USDA/Official estimate to 27.6 MMT and 26.7MMT. Mexico is the sixth largest corn producer in the world, with approximately three percent of global corn produ- ction. Corn is still the largest crop in Mexico in terms of production and consumption. Production in Mexico is diverse, from large-scale and irrigated commercial ope- rations to very small farms that grow local varieties on rain-fed plots for subsistence. Despite its relevance as the main crop, several factors continue to prevent an increase of corn production (as well as other coarse gra- ins and cereals) in Mexico. The main restriction is low productivity. The FAS/Mexico forecast for total corn consumption for MY2019/20 is 44.7 MMT, an increase of 2.3 per- cent compared to previous year. Most of the increase is accounted for by greater feed use, although food use is also expected to rise slightly. Corn grain is used for tortil- las and corn flour, representing a large part of the caloric intake of the population. Private analysts have stated that the Mexican corn market differs from most other countries, as corn is pri- marily considered a food grain rather than a feed grain. Due to this difference, Mexico has developed two dis- tinct corn markets: one for white corn mainly for human consumption, and one for yellow corn, which is mainly for feed use. For MY 2019/20, total corn imports are forecast to inc- rease approximately six percent over MY2018/19 to 17.8 MMT, to match the relatively bullish demand for feed consumption. Mexico’s corn exports are expected to re- main unchanged at 1.0 MMT in MY2019/20, due to an oversupplied and very competitive international market. Mexico is the world’s fourth largest producer of sorg- hum. The sorghum production estimate for MY 2018/19 (Oct-Sep) has been raised slightly to 4.7 MMT. And for MY 2019/20, production is initially forecast to increase to 5.0 MMT. Despite this increase, the expected produc- tion level is lower than the average obtained some years ago. After a high of 8.5 MMT in MY 2013/14, producti- on decreased substantially. And the forecast for sorghum consumption in MY 2019/20 is expected to increase slightly to 5.15 MMT. The poultry industry continues to be the largest consu- mer of sorghum in Mexico and uses the crop primarily in the form of mixtures and feed concentrates. Total sorg- hum imports for MY 2019/20 is forecast to remain stab- le at 400,000 MT, due to the bearish demand from feed millers and poultry and hog producers.