Mexico Oilseeds: Only Ragasa Plans to Expand and Modernize in 2023/2024
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Mexico’s Oilseed production is forecast to increase to 328,000 MT in MY 2023/24, entirely due to increased Soybean production. The increase in planted area is the main reason for the rise and assumes the resumption of favorable weather conditions (i.e., mainly adequate moisture levels). Mexico’s Oilseeds production is subject to unpredictable weather conditions, as approximately 83 percent of production takes place in non-irrigated areas.
For the MY 2023/24, the planted area for Soybeans will reach 160,000 hectares (ha), a 20 percent increase from the revised MY 2022/23 area estimated but still 16 percent below MY 2021/22 area. This increase assumes the resumption of normal weather conditions (i.e., adequate moisture levels), which would also be reflected in higher yields this marketing year. However, despite this increase in production, Mexico still supplies only 3.4 percent of its total domestic needs.
Post’s total Soybean production estimate for MY 2022/23 (September to August) is revised downward based on more complete SADER data, which reflects lower harvested area than initially expected. The updated SADER data includes the final figures for the 2022 Spring/Summer crop cycle and the updated information for the 2022/23 Fall-Winter crop cycle as of December 31, 2022. Soybean output decreased due to abnormal weather conditions, which negatively impacted yields. Official sources noted that the rainy season was irregular and untimely. The most significant reduction in planted and harvested areas occurred in Tamaulipas, one of the leading producing states, in the 2022 Spring-Summer crop cycle.
Crushing capacity in Mexico is concentrated among five large companies that represent approximately 92 percent of total capacity. The companies and their percent of crush capacity are: Ragasa (40 percent), Agydsa-Patrona (22 percent), Proteinas y Oleicos (13 percent), Cargill (11 percent), and Archer Daniels Midland (6 percent). As these entities compete for market share, significant investments have been made in recent years toward production plants that reduce costs and expand services.
In MY2023/24, only Ragasa reportedly plans to expand and modernize due to the expected slowdown in Mexico’s economy. Crushing margins were excellent in CY 2022, and the challenge is to maintain the same level in CY 2023, mainly through Soybeans. While more efficient crushers control more of the market, international Soybean prices and the Soybean meal market ultimately impact crushing decisions.
Due to the livestock sector’s population growth rate and outlook, overall Oilseed imports are expected to increase approximately two percent in MY 2023/24 to 8.3 MMT. The United States and Canada are the leading suppliers of Oilseeds to Mexico’s market. However, since Oilseed import decisions are based on price and credit availability, some importers (crushers and Vegetable Oil refiners) have also imported from other origins.
One primary Oilseed crusher and Oil refining company, for example, noted that during specific periods of the year (i.e., March), Soybean imports from Brazil become relatively more price competitive compared to U.S origins. Due to the favorable perspective of Brazil’s Soybean crop in CY2023, some volume is expected to be imported from this origin. The volume imported from Brazil could reach approximately 800,000 MT in CY 2023. However, due to geographic proximity and lower freight costs, U.S. suppliers should remain price competitive.
Vegetable Oil Trade in Mexico
According to AgFlow data, Mexico imported 88,220 tons of Soybean Oil from Argentina in July – August 2023. Total Vegetable Oil imports for MY 2023/24 are forecast to increase by 2.9 percent to 458,000 MT, driven chiefly by population growth and expected stronger demand from the HRI sector. The expected economic slowdown and persistent inflation in 2023 could moderate the growth of Vegetable Oil imports. However, in CY 2024, a rebound is expected in Mexico’s economy and, consequently an increase in imports of Vegetable Oils. Based on updated data, post reduces total Vegetable Oil imports for MY 2021/22, particularly the estimates for rapeseed and sunflower Oil imports. Most Vegetable Oil imports are crude Oil, which is refined in Mexico.
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