Probably not the shirt you want to wear on your Mexican vacation right now….
Mexico is one of the top buyers of American corn in the world today. And Mexican senator Armando Rios Piter, who leads a congressional committee on foreign relations, says he will introduce a bill this week where Mexico will buy corn from Brazil and Argentina instead of the United States.
…American farmers sent $2.4 billion of corn to Mexico in 2015, the most recent year of available data. In 1995, the year after NAFTA became law, corn exports to Mexico were a mere $391 million [Patrick Gillespie, “Mexico Ready to Retaliate by Hurting American Corn Farmers,” CNN, 2017.02.13]
In 2015, the U.S. exported 12.5% of its corn, and Mexico bought 26% of U.S. corn exports. Multiply those percentages, and Mexico only buys 3.3% of total U.S. corn production. We can ride that out, right?
Farmers have little capacity to absorb further price drops. Grains and other commodities already fetch less than it costs to produce them for many farmers. And there could be long term damage to the agriculture sector. If Mexico finds new suppliers, it may be hard for the U.S. to win back that nation’s business in the future.
Plus, any unsold products that had been destined for Mexico would boost stockpiles in the U.S. That additional supply would put downward pressure on prices unless it can be sold elsewhere [Mark Steil and Martin Moylan, “Mexican Border Tax Could Throttle Minnesota Farmers,” MPR News, 2017.01.30].
My Googling has thus far failed to find stats on how much corn South Dakota sells to Mexico. In 2015, South Dakota was the nation’s sixth-largest corn producer. Mexico bought $394 million in exports from South Dakota in 2015, second only to Canada’s $527 million. Stats from 2013 indicate that South Dakota exported 36% of its corn and that “While some [was] purchased in other states, most [was] shipped overseas to predominately [sic] Asian countries.” But even if South Dakota isn’t selling much corn directly to Mexico, the national loss of a quarter of our corn export market will lower corn prices across the country, including in South Dakota.
C.H American farmers will not care , neither will the South Dakota farmers.They voted for Trump and will be very happy with what ever they get.A trade war is where it’s heading if this arrogant president keeps it up.Cattle prices could go down and crops.
David Newquist
2017-02-14 07:36
Some ag economists have pointed out that with the U.S. dismantling NAFTA and pulling out of TPP, Mexico could realign itself with its Latin neighbors, expand its relationship with China, negotiate directly with Canada, and leave the U.S. to make what bi-lateral relationships are leftover.
John Tsitrian
2017-02-14 08:47
This would probably be a dumb move by Mexico, considering that their ag exports to the U.S. have increased by 400% (to $21 billion/yr) since NAFTA was signed. If we do some retaliating on the ag front, everybody suffers, producers and consumers alike. As to corn, per se, prices are set by a world market, so Mexico’s decision probably wouldn’t make all that much difference to SD producers, who, like corn producers all over the world are dealing with a 5 year high in worldwide stocks-to-use ratios. I suspect cooler economic heads will prevail in both countries, these hysterical gestures notwithstanding.
jerry
2017-02-14 09:01
Loosing Mexico could be very costly indeed for the US. Republicans are playing with a fire that could get out of control fast. I wonder what Iowa farmers are saying about loosing the corn sales? What say the people of Iowa to Steve King and the rest of the idiots there? 50 billion for a wall? Trump better save that moolah so he can subsidize those who are gonna loose their farms over this stupidity.
jerry
2017-02-14 09:10
Because of weather issues in southern Spain with the rain, the UK has lost the importation source of greens like lettuce. They have now been purchasing directly from Mexico and the US. What Trump and the children in Washington do not realize is that globalization is an actual fact that really does not depend on the US to be there in the event of shortages. China is becoming a very important player in Africa right now as the US has decided they do not want to much to do with Black folks. Africa is a breadbasket that will feed the world. Speaking of China, here is what they are doing with surplus domestic corn http://www.reuters.com/article/us-china-corn-exports-idUSKCN1201GB
Moses6
2017-02-14 09:12
Let’s get that wall built .wedont care who they buy from were the U.S Farmers will get by their income not that good they wil survive.
Don Coyote
2017-02-14 09:20
Hmmmm. Brazil is currently increasing its corn imports from the U.S. because of lower yields due to drought. Argentina is experiencing drought as well dropping corn yields. Neither appears to have much excess capacity to increase market share.
Plus some of Argentina and Brazil’s commodities are subject to export taxes making them more expensive. Senator Piter is a member of the Socialist party in Mexico, a minority party with little power. All bluster.
Chip
2017-02-14 09:32
Yes, most of South Dakota’s corn that gets exported goes to the Pacific NW. And no the US cannot stand any additional decreases in exports. Our shelves are full. What scares me the most is that the PGiC* hasn’t even hardly gotten started destroying trade relations with China yet. China buys 60% of the world’s exported beans. I don’t think that Orange Hitler has the hand he thinks he does with them. Or Mexico for that fact. It will be fun to watch Midwestern farmers who voted for Drumpf have to spin and back pedal their way around this when their own pocketbooks are effected.
Chip
2017-02-14 10:06
Drumpf is all bluster too. This should be productive…
mike from iowa
2017-02-14 10:12
Somewhere I read South Dakota needs to boost corn yields by 40 million bushel by 2022-23 to keep up with demand.
I also read Mexico was going to boost import of corn this year.
As Chip sez, SD corn exports go by way of the Pacific NW as it is cheaper to ship that way. I believe 30 cents a bushel cheaper to ship.
Don Coyote
2017-02-14 10:33
@Chip: Trump as President has way more power than a minority party Senator in Mexico. Riter even proposes expropriation of American owned property in Mexico
“The report doesn’t explain much in depth, so let me note that you should take it with a grain of salt. Rios Piter is a member of the socialist PRD party — quite radical politically, and third-place electorally by a long way in the Mexican Congress behind the center-left PRI (the party of President Enrique Peña Nieto) and the conservative PAN.”
If the US is dumb enough to have a trade war, we will loose it. I could give a care about how much power Trump claims to have, money is the power leader of the world.
Roger Elgersma
2017-02-14 11:34
when I was farming thirty years ago we had far smaller yeilds and sold a higher percentage of our crops on the world market. Not sure what caused the large change, but have read that Argentine and Ukraine sell more corn than we do now.
jerry
2017-02-14 11:42
While Trump and republicans ignore Africa, someone else is paying attention. Obama needs to be in charge, not as president, but as the CEO. Republicans cannot govern themselves little alone a country. Take a look at Saudi Dakota for instance, the head dude blathers about a 10 million dollar surplus and then comes up short 50 million. Time to dust off that rainy day fund (if it exists) and be responsible to pay the bills. http://www.nationalgeographic.com/foodfeatures/land-grab/
96Tears
2017-02-14 12:15
South Dakota’s ag economy has slipped over the last few years, and taking another dip in the price of corn increases the vulnerability of farms which get pressures from other factors. The experts indicate that the combination of lower crop prices and higher land costs are producing another bubble that may pop and cause more losses. Scanning the remarks here, the loss of Mexico corn exports won’t be felt severely across the nation. But for a state like South Dakota which has a stale economy already (funding problems in Pierre), the ag sector isn’t as resilient as it used to be, and losing a long-time market in Mexico is not a bump we need.
Again, all of this is the result of an insane President who can’t keep his tiny hands off his Twitter account, and a totally spineless Republican caucus in Pierre and in Congress who won’t tell the Fuhrer that he has no clothes.
mike from iowa
2017-02-14 12:42
Roger E -the large change in the corn market is we sell more of the corn crop by the gallon as in gasahol.
Bob Newland
2017-02-14 12:43
Rarely has a commenter a articulate as Moses6 graced these pages.
moses6
2017-02-14 13:18
Bob well excuse me some time I just let it all hang out.
moses6
2017-02-14 13:19
Bob well excuse me,some time I just let it all hang out.
Chip
2017-02-14 16:10
Sorry Don Coyote, I’m going to throw the BS flag on this one. Drumpf has no more ability to seal the deal on this than Senator Piter, or a night janitor that specializes in cleaning toilets. He lacks the skill set. Unless it has to do with building failproof hotels or golf courses, or feeding his narcissism on a realty TV show, he just comes up short. He couldn’t even branch away into casinos without running them into the ground. Better luck to you guys in 2020.
Don Coyote
2017-02-14 17:56
Just as I suspected, Brazil and Argentina don’t possess enough capacity to meet Mexico’s demand if they quit buying from the U.S.
“Right now and in most years, South America does not have enough excess supply to meet Mexico’s demand. In the last three years, if Mexico would have sourced all of its corn from Brazil and Argentina, South America’s ending stocks would have been more than completely depleted. The price of corn in SA would likely rise sharply.”
Fransen also stated that if Mexico shifted its purchases to SA “any demand that would shift from the US to South America would cause other world buyers to shift purchases from SA to the US”
In the same link note the Mexican “no mas” move would cost Mexico an additional $20-$30 @ ton in shipping costs.
“These companies take 14 million metric tons of corn from the U.S., most railed across the U.S./Mexico border. They (Cargill, Bunge) can’t rail from Argentina. And, the second corn crop ‘safrihna’,from Brazil, won’t be available until July/August. Plus, even if you figure the Mexican Senator, can find a subsidy for 20-30 dollars a ton in extra freight and handling costs, this ‘no mas’ corn import measure might be good bluster and we can all fall on our face for a day.. as we listen to the howling,” the Chicago trader says.”
No surprise that a Socialist has such a poor working knowledge of basic economics.
mike from iowa
2017-02-14 18:19
The price of corn in SA would likely rise sharply.”
That would likely incentivise SA countries to double or triple their output of corn. If America can do it, others can too.
Or they could import more cheaper US corn and resell it to Mexico at higher prices.
Darin Larson
2017-02-14 19:49
Coyote says “Just as I suspected, Brazil and Argentina don’t possess enough capacity to meet Mexico’s demand if they quit buying from the U.S.”
This statement is true in the short term, but not true in the long term. Brazil could easily meet Mexico’s corn demand in the long term. Mexico would probably have to pay a little more for Brazilian corn to begin with, but ocean freight from Brazil to Mexico would be competitive with rail from the US in the long term. They could easily shift some soybean acres to corn acres. This article below is a few years old now, but the graphs show clearly the increase in soybean and corn production in Brazil that competes directly with US commodities:
I would say Don Coyote that they could swing 50%, which would be a detriment in itself. But let’s not fool ourselves. We will continue to export them corn, and they won’t be paying for any walls. The likelihood of one being built at all is very low. Besides, how would we get corn there through a wall? Maybe over the top? Like a golden shower?
Darin Larson
2017-02-14 22:43
Here is the World Agricultural Supply and Demand (WASDE) report from the USDA which shows at page 562-23 the projections for 2016-2017 world corn use and the projections for major importers and exporters. It shows that Argentina and Brazil project to export about 53 million metric tons (mmt) of corn. Mexico is projected to import 13.8 mmt of corn, so Argentina and Brazil could completely supply Mexico by using a little over a quarter of the exportable corn from Argentina and Brazil. The US might pick up some of the business from countries that would be shorted by Argentina and Brazil, but that is not a given by any means. There are many feed substitutes for corn–feed wheat for instance. World supplies of feed wheat runneth over.
In Mexico, the demand is for white corn for consumption what drives the import. Texas and Nebraska are the biggest producers of white corn with yellow corn here being used for feed in Mexico for the most part. Brazil and Argentina will have record crops for this year, which is good news also for South Africa as well. If Mexico is forced to look elsewhere for its grain needs, they will succeed in finding the needed grain. There may be shortages, but the poor always suffer, so they will continue with that. In the business world, the ag economy is always looked at as if it came from Mars, so it is of no surprise that Trump is clueless about it. It does not help that we have three dingalings that know absolutely nothing about the ag economy as well. The US will be in for a rude ride if they are dumb enough to keep this isolationist movement going. We are in a competitive world with some very good competition out there, we should not take that for granted.
Farmers will feel the wrath of Trump if this happens.Then again they voted for him in great numbers.Again their not worried on what they make as long as Trump can make america great again.Go draft dodger Trump.
C.H American farmers will not care , neither will the South Dakota farmers.They voted for Trump and will be very happy with what ever they get.A trade war is where it’s heading if this arrogant president keeps it up.Cattle prices could go down and crops.
Some ag economists have pointed out that with the U.S. dismantling NAFTA and pulling out of TPP, Mexico could realign itself with its Latin neighbors, expand its relationship with China, negotiate directly with Canada, and leave the U.S. to make what bi-lateral relationships are leftover.
This would probably be a dumb move by Mexico, considering that their ag exports to the U.S. have increased by 400% (to $21 billion/yr) since NAFTA was signed. If we do some retaliating on the ag front, everybody suffers, producers and consumers alike. As to corn, per se, prices are set by a world market, so Mexico’s decision probably wouldn’t make all that much difference to SD producers, who, like corn producers all over the world are dealing with a 5 year high in worldwide stocks-to-use ratios. I suspect cooler economic heads will prevail in both countries, these hysterical gestures notwithstanding.
Loosing Mexico could be very costly indeed for the US. Republicans are playing with a fire that could get out of control fast. I wonder what Iowa farmers are saying about loosing the corn sales? What say the people of Iowa to Steve King and the rest of the idiots there? 50 billion for a wall? Trump better save that moolah so he can subsidize those who are gonna loose their farms over this stupidity.
Because of weather issues in southern Spain with the rain, the UK has lost the importation source of greens like lettuce. They have now been purchasing directly from Mexico and the US. What Trump and the children in Washington do not realize is that globalization is an actual fact that really does not depend on the US to be there in the event of shortages. China is becoming a very important player in Africa right now as the US has decided they do not want to much to do with Black folks. Africa is a breadbasket that will feed the world. Speaking of China, here is what they are doing with surplus domestic corn http://www.reuters.com/article/us-china-corn-exports-idUSKCN1201GB
Let’s get that wall built .wedont care who they buy from were the U.S Farmers will get by their income not that good they wil survive.
Hmmmm. Brazil is currently increasing its corn imports from the U.S. because of lower yields due to drought. Argentina is experiencing drought as well dropping corn yields. Neither appears to have much excess capacity to increase market share.
http://www.farmfutures.com/story-global-hot-spots-brazil-import-more-corn-24-145172
Plus some of Argentina and Brazil’s commodities are subject to export taxes making them more expensive. Senator Piter is a member of the Socialist party in Mexico, a minority party with little power. All bluster.
Yes, most of South Dakota’s corn that gets exported goes to the Pacific NW. And no the US cannot stand any additional decreases in exports. Our shelves are full. What scares me the most is that the PGiC* hasn’t even hardly gotten started destroying trade relations with China yet. China buys 60% of the world’s exported beans. I don’t think that Orange Hitler has the hand he thinks he does with them. Or Mexico for that fact. It will be fun to watch Midwestern farmers who voted for Drumpf have to spin and back pedal their way around this when their own pocketbooks are effected.
Drumpf is all bluster too. This should be productive…
Somewhere I read South Dakota needs to boost corn yields by 40 million bushel by 2022-23 to keep up with demand.
I also read Mexico was going to boost import of corn this year.
As Chip sez, SD corn exports go by way of the Pacific NW as it is cheaper to ship that way. I believe 30 cents a bushel cheaper to ship.
@Chip: Trump as President has way more power than a minority party Senator in Mexico. Riter even proposes expropriation of American owned property in Mexico
“The report doesn’t explain much in depth, so let me note that you should take it with a grain of salt. Rios Piter is a member of the socialist PRD party — quite radical politically, and third-place electorally by a long way in the Mexican Congress behind the center-left PRI (the party of President Enrique Peña Nieto) and the conservative PAN.”
http://www.washingtonexaminer.com/mexican-lawmaker-threatens-a-corn-war/article/2614686
Canada says, Hey man, what about me, we have some serious corn here as well? https://www.bloomberg.com/news/articles/2014-04-15/canada-s-climate-warms-to-corn-as-grain-belt-shifts-north
If the US is dumb enough to have a trade war, we will loose it. I could give a care about how much power Trump claims to have, money is the power leader of the world.
when I was farming thirty years ago we had far smaller yeilds and sold a higher percentage of our crops on the world market. Not sure what caused the large change, but have read that Argentine and Ukraine sell more corn than we do now.
While Trump and republicans ignore Africa, someone else is paying attention. Obama needs to be in charge, not as president, but as the CEO. Republicans cannot govern themselves little alone a country. Take a look at Saudi Dakota for instance, the head dude blathers about a 10 million dollar surplus and then comes up short 50 million. Time to dust off that rainy day fund (if it exists) and be responsible to pay the bills. http://www.nationalgeographic.com/foodfeatures/land-grab/
South Dakota’s ag economy has slipped over the last few years, and taking another dip in the price of corn increases the vulnerability of farms which get pressures from other factors. The experts indicate that the combination of lower crop prices and higher land costs are producing another bubble that may pop and cause more losses. Scanning the remarks here, the loss of Mexico corn exports won’t be felt severely across the nation. But for a state like South Dakota which has a stale economy already (funding problems in Pierre), the ag sector isn’t as resilient as it used to be, and losing a long-time market in Mexico is not a bump we need.
Again, all of this is the result of an insane President who can’t keep his tiny hands off his Twitter account, and a totally spineless Republican caucus in Pierre and in Congress who won’t tell the Fuhrer that he has no clothes.
Roger E -the large change in the corn market is we sell more of the corn crop by the gallon as in gasahol.
Rarely has a commenter a articulate as Moses6 graced these pages.
Bob well excuse me some time I just let it all hang out.
Bob well excuse me,some time I just let it all hang out.
Sorry Don Coyote, I’m going to throw the BS flag on this one. Drumpf has no more ability to seal the deal on this than Senator Piter, or a night janitor that specializes in cleaning toilets. He lacks the skill set. Unless it has to do with building failproof hotels or golf courses, or feeding his narcissism on a realty TV show, he just comes up short. He couldn’t even branch away into casinos without running them into the ground. Better luck to you guys in 2020.
Just as I suspected, Brazil and Argentina don’t possess enough capacity to meet Mexico’s demand if they quit buying from the U.S.
“Right now and in most years, South America does not have enough excess supply to meet Mexico’s demand. In the last three years, if Mexico would have sourced all of its corn from Brazil and Argentina, South America’s ending stocks would have been more than completely depleted. The price of corn in SA would likely rise sharply.”
Fransen also stated that if Mexico shifted its purchases to SA “any demand that would shift from the US to South America would cause other world buyers to shift purchases from SA to the US”
http://www.agriculture.com/news/business/no-mas-to-us-corn-imports-mexico-senator-says
In the same link note the Mexican “no mas” move would cost Mexico an additional $20-$30 @ ton in shipping costs.
“These companies take 14 million metric tons of corn from the U.S., most railed across the U.S./Mexico border. They (Cargill, Bunge) can’t rail from Argentina. And, the second corn crop ‘safrihna’,from Brazil, won’t be available until July/August. Plus, even if you figure the Mexican Senator, can find a subsidy for 20-30 dollars a ton in extra freight and handling costs, this ‘no mas’ corn import measure might be good bluster and we can all fall on our face for a day.. as we listen to the howling,” the Chicago trader says.”
No surprise that a Socialist has such a poor working knowledge of basic economics.
The price of corn in SA would likely rise sharply.”
That would likely incentivise SA countries to double or triple their output of corn. If America can do it, others can too.
Or they could import more cheaper US corn and resell it to Mexico at higher prices.
Coyote says “Just as I suspected, Brazil and Argentina don’t possess enough capacity to meet Mexico’s demand if they quit buying from the U.S.”
This statement is true in the short term, but not true in the long term. Brazil could easily meet Mexico’s corn demand in the long term. Mexico would probably have to pay a little more for Brazilian corn to begin with, but ocean freight from Brazil to Mexico would be competitive with rail from the US in the long term. They could easily shift some soybean acres to corn acres. This article below is a few years old now, but the graphs show clearly the increase in soybean and corn production in Brazil that competes directly with US commodities:
https://www.danielstrading.com/featured/2013/10/10/twig-note-109-brazilian-production-estimates
I would say Don Coyote that they could swing 50%, which would be a detriment in itself. But let’s not fool ourselves. We will continue to export them corn, and they won’t be paying for any walls. The likelihood of one being built at all is very low. Besides, how would we get corn there through a wall? Maybe over the top? Like a golden shower?
Here is the World Agricultural Supply and Demand (WASDE) report from the USDA which shows at page 562-23 the projections for 2016-2017 world corn use and the projections for major importers and exporters. It shows that Argentina and Brazil project to export about 53 million metric tons (mmt) of corn. Mexico is projected to import 13.8 mmt of corn, so Argentina and Brazil could completely supply Mexico by using a little over a quarter of the exportable corn from Argentina and Brazil. The US might pick up some of the business from countries that would be shorted by Argentina and Brazil, but that is not a given by any means. There are many feed substitutes for corn–feed wheat for instance. World supplies of feed wheat runneth over.
https://www.usda.gov/oce/commodity/wasde/latest.pdf
In Mexico, the demand is for white corn for consumption what drives the import. Texas and Nebraska are the biggest producers of white corn with yellow corn here being used for feed in Mexico for the most part. Brazil and Argentina will have record crops for this year, which is good news also for South Africa as well. If Mexico is forced to look elsewhere for its grain needs, they will succeed in finding the needed grain. There may be shortages, but the poor always suffer, so they will continue with that. In the business world, the ag economy is always looked at as if it came from Mars, so it is of no surprise that Trump is clueless about it. It does not help that we have three dingalings that know absolutely nothing about the ag economy as well. The US will be in for a rude ride if they are dumb enough to keep this isolationist movement going. We are in a competitive world with some very good competition out there, we should not take that for granted.
Structural changes in Mexico http://www.world-grain.com/news/news-home/features/2014/1/structural-changes-in-mexican-corn-market.aspx?cck=1
Farmers will feel the wrath of Trump if this happens.Then again they voted for him in great numbers.Again their not worried on what they make as long as Trump can make america great again.Go draft dodger Trump.