Mexico: 60% Of US Corn Exports Reach by Rail

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For the first seven months of 2022/23 (September 2022-March 2023), combined shipments and sales of U.S. Corn to Mexico reached 13.5 million tons. This is the third highest level on record, signaling robust Mexico demand for U.S. supplies. Mexico is the largest market for U.S. Corn exports, comprising over one-quarter of all U.S. Corn exports in 2021/22. Sustained Mexico demand for imports of U.S. Corn is attributed to increasing demand for livestock products.
Most of Mexico’s Corn production is white Corn for food use, but 90-95 percent of the yellow Corn is needed for animal feed use, and some industrial applications are imported from the United States. A lack of water in rain-fed areas (that constitute as much as two-thirds of Mexico’s Corn area) constrains Corn production, necessitating significant imports of yellow Corn from the United States to meet growing feed demand. Moreover, per IGC data, U.S. supplies offer competitive prices, with average prices for U.S. Corn at $265/ton over the past year, $10-$20/ton cheaper than prices from Argentina and Brazil, respectively.
Competitive pricing is aided by the United States-Mexico-Canada Agreement (USMCA) and low-cost logistics due to the U.S.-Mexico rail infrastructure. The USMCA maintains duty- and quota-free trade between the United States and Mexico. Rail linkages are robust, with 60 percent of U.S. Corn exports to Mexico traveling by rail in 2022, per the AMS Mexico Transportation Cost indicator report. The availability of transit options allows exporters to partially offset the impact of transport disruptions, such as high costs due to logistics bottlenecks during the COVID-19 pandemic or increased barge costs due to lower water levels in the Mississippi.
According to AgFlow data, the US exported 3.4 million tons of Corn to Mexico in Q1 2023, followed by Brazil (0.14 million tons). Per data from the IGC, average freight prices for shipments of U.S. Corn to the same destination in Mexico were as much as $20/ton to $40/ton cheaper than supplies from Brazil or Argentina in the September-March period over the past four years.
Global Corn trade is forecast lower as lower exports from Argentina, Burma, Mexico, and Serbia are only partially offset by increased exports from Russia and Ukraine. Global imports are forecast to slightly lower this month, with cuts in Egypt, Thailand, the United States, and Venezuela exceeding higher imports for the EU, Turkey, and Uruguay. The U.S. season-average farm price is unchanged at $6.60 per bushel.

Corn Projection of Mexico’s Agricultural Ministry

In the 2022/23 market cycle, by February 2023, it is expected that the supply of white Corn will be 25 million 737 thousand tons, a figure 2.3% lower compared to the 2021/22 cycle, determined by a reduction in production and initial inventory of 1.8% and 11.3%, respectively, while imports will increase 7 percent. For the autumn-winter 2022-2023 cycle, the advance to February 2023 indicates that the planted area is one million 125 thousand 445 hectares. The states with the largest planted area are Sinaloa, Veracruz, Chiapas, and Oaxaca, participating with 77.3% of the national total.
On the demand side, the 2022/23 cycle estimates made in February 2023 indicate that human consumption plus self-consumption of cereal could be 18 million 579 thousand tons, while exports could reach 201 thousand tons. The inventory final is estimated at one million 713 thousand tons, 10.5% less than the previous market cycle. Human consumption participates with 56% of the national demand, and production will contribute 89.8% of the total supply. As of February 2023, the price paid to the producer of white Corn was 6,250 pesos per ton, 14.9% higher compared to the same month of 2022. The tortilla was quoted at 21.93 pesos per kilogram, which indicates an increase of 16.6% compared to the previous year.