Bean importers nervous as Trump takes on Mexico

Some experts say the tariff threat is prompting Mexico to buy more Canadian beans, but analyst says it is simply due to a shortage

A dry bean trader says Mexican buyers are anxious about a potential supply disruption if verbal sparring with the United States erupts into a full-fledged trade war.

U.S. President Donald Trump is contemplating slapping a 20 percent tariff on all Mexican goods crossing the border to pay for a wall he wants to build to keep illegal Mexican immigrants out of the U.S.

That has raised the ire of Mexican politicians. A Mexican senator who leads a foreign relations committee recently said he will introduce a bill to stop buying U.S. corn, sourcing it from Brazil or Argentina instead.

Mexico bought 13.3 million tonnes of U.S. corn in 2015-16 worth US$2.5 billion.

There are fears that if a trade war erupts Mexico will start applying bans or tariffs on other agricultural imports from the U.S., such as dry beans.

Some say that has caused an uptick in the export of Canadian beans to Mexico in advance of any potential trade war.

“There are buyers that are getting nervous and they’re asking us to ship product faster than what they were expecting us to, to avoid these tariffs,” said Lynne Poiron, bean merchandiser with the Scoular Company.

Mexico is the top market for U.S. and Canadian pinto and black beans and a large buyer of other classes as well.

It is unclear whether any potential retaliatory tariff would apply to Canadian beans routed through the U.S., but it is clear Mexican buyers are nervous about the prospect.

“They’re trying to get a surplus in their back pocket before anything were to happen,” said Poiron.

Tom Kennelly, president of the Northarvest Bean Growers Association, said that is not the feeling he got when he met with Mexican buyers in Cancun at the 2017 U.S./Mexico International Dry Bean Congress

“They’re not running out and buying things up just to get supply because of stuff that is potentially going to happen with the U.S.,” he said. “We didn’t get that impression.

“What they’re dealing with right now is just a flat out shortage be-cause they had a short crop two cycles in a row now,” he said.

The U.S. Dry Bean Council is forecasting 800,000 tonnes of Mexican bean production, which is well short of earlier projections of 1.1 million tonnes.

In addition, a hurricane caused widespread quality damage in the key growing states of Zacetecas, Durango and Chihuahua.

There has also been damage to beans in Sinaloa state due to record low temperatures and an early frost.

The poor crop is creating strong demand for pinto and black beans.

However, buyers say the price of U.S. and Canadian beans are too high now.

By the time U.S. black or pinto beans get to the Mexican market, the cost is about US$38 to $40 per hundredweight, which is too pricey for the Mexican consumer.

Kennelly said there was no talk at the conference about potential bean tariffs because it is only speculation so far.

But he said the tension between the two countries is unnerving.

“Is it a concern? You bet it is.”

U.S. farm groups have expressed dismay about Trump’s protectionist rhetoric but Kennelly said it is too early to panic.

“I’m optimistic that cooler heads will prevail,” he said.

Kennelly is confident that if Mexico turns its back on the U.S. and starts sourcing more beans from Canada and other exporting regions, then the U.S. will pick up business in those markets that Canada and other exporters can no longer service.

“What you’re going to see is just a redistribution of who does what business with what country.”

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