CHICAGO, Ill. (Reuters) — Mexico’s attempts to diversify its supplies of corn could threaten a crucial market for U.S. farmers who are increasingly dependent on exports to unload record stockpiles that are depressing prices.
Mexico buys nearly all its corn imports from the United States, accounting for about 28 percent of total U.S. corn exports, according to the U.S. Department of Agriculture.
But now Mexico wants to lessen that dependence as U.S. President Donald Trump threatens to upend trade between the countries. Last week, Mexico’s agriculture minister revealed plans to visit Argentina and Brazil to buy yellow corn.
A grain buyer at a corn mill in Mexico said he had already asked for price quotes from Brazilian and Argentine exporters for corn shipments to Mexico.
Mexico tends to import grain from South America or countries other than the U.S. only when it is cheaper or supplies are tight.
U.S. corn prices of around US$190 per tonne are about $10 to $15 lower than South American grain delivered to Mexico, trade sources said.
“The extent to which there is any switching that takes place (by Mexico) to South America frankly all depends on price. At the moment it doesn’t work, so there would have to be something else that triggers it,” said Soren Schroder, chief executive officer of Bunge Ltd.
U.S. farmers are concerned that the new administration’s early maneuvering on trade threatens exports, which are a rare bright spot in an agricultural economy where farm income could fall to its lowest since 2002 in inflation-adjusted terms.
Trump, who was supported by many Midwest grain states when he won the presidential election in November, has already withdrawn the United States from the Trans-Pacific Partnership deal. He has also raised the prospect of re-negotiating the North American Free Trade Agreement with Canada and Mexico, which food producers say has quadrupled U.S. agricultural exports in the region during the past two decades.
“We are concerned that growing rhetoric is creating an environment in which Mexican buyers feel they need to look at alternate suppliers, which could affect U.S. market share,” said the U.S. Grains Council.