Report Highlights:

Government programs are successfully contributing to rebuild the herd while live cattle exports continue historical trends. Despite slower liquidation, which restrains slaughter, beef production is expected marginally up. High prices and a strong U.S. dollar are suppressing Mexican demand for imported beef. Increased productivity on improved genetics and enlargement of breeding swine herd will help to overcome Porcine Epidemic Diarrhea (PED) aftereffects. Even with increased production, Mexico will keep importing hams and picnics as well as mechanically deboned meat (MDM).

Animal Numbers, Cattle

Production:

Government Programs and Improving Conditions Slow Liquidation

As the Government of Mexico's (GOM) financial incentive programs to repopulate the domestic herd and improve genetics are reportedly meeting the objectives, Mexican cattle production is forecast to expand to 7.0 million head in 2016, producers are entitled to receive a direct subsidy provided they register for the 2016 Program to Promote the Livestock Sector (Programa de Fomento Ganadero).

This and other programs are enabling producers to remain in business and to offset obstacles the domestic herd has previously encountered to repopulate, particularly the lack of steers for feedlots. With the incentive to feed steers, calf slaughter is forecast to decline in 2016. However, even with an ample supply of grain and pasture in 2016, given the longevity necessary for significant change, herd expansion is not expected until 2017 at the earliest.

As relatively low grain prices keep production costs fairly stable and elevated beef prices generate positive margins, feedlot producers will likely lengthen feed duration, resulting in higher weights. The decline in calf slaughter will also contribute to higher weights.

Trade:

Cattle Exports Marginally Lower as Retention Generally Offsets U.S. Cattle Demand

Live cattle exports are forecast at 1.12 million head in 2016, which is marginally down from 2015 (1.21 million head) as lower prices are expected in the United States due to herd recovery. However, the market remains attractive. As noted previously, retention by feedlots will decrease exportable supplies. Normal weather and fair pasture conditions in 2016 will also keep export levels low compared to during the 2012 drought.

Cattle Imports Remain Stable on Continued Herd Improvement

Live cattle imports are forecast at 23,000 head, unchanged from 2015. Despite high prices of U.S. breeding stock partnered with a strong dollar, Mexico will continue importing cattle for herd improvement. The import of high breed cattle is a mid to long term objective for the cattle sector.

Animal Numbers, Cattle

2014

2015

2016

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

Mexico

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Total Cattle Beg. Stks

17760

17760

17120

17120

16450

16615

Dairy Cows Beg. Stocks

3215

3215

3250

3250

3250

3275

Beef Cows Beg. Stocks

6700

6700

6700

6700

6800

6800

Production (Calf Crop)

6750

6750

6850

6850

6925

7000

Total Imports

28

28

20

23

25

23

Total Supply

24538

24538

23990

23993

23400

23638

Total Exports

1176

1176

1300

1213

1200

1125

Cow Slaughter

1400

1400

1400

1350

1340

1340

Calf Slaughter

300

300

300

275

250

250

Other Slaughter

4300

4300

4335

4350

4375

4375

Total Slaughter

6000

6000

6035

5975

5965

5965

Loss

242

242

205

190

220

170

Ending Inventories

17120

17120

16450

16615

16015

16378

Total Distribution

24538

24538

23990

23993

23400

23638

(1000 HEAD)

Meat, Beef and Veal

Production:Production is forecast marginally higher at 1.86 million tons. For the second year in a row, heavier weights offset a decline in slaughter. Liquidation, albeit at a slower rate, continues to depress slaughter.

Consumption:

Consumption is also forecast relatively stable at 1.78 million tons. Per capita consumption will be marginally unchanged following several years of decline. Higher beef prices compared to other animal proteins continue to constrain consumption, particularly among low and medium income consumers.

Trade:

Imports are forecast at 165,000 tons, a six percent decline from 2015. High U.S. beef prices and a strong U.S. dollar suppress Mexican demand.

Exports are forecast at 250,000 tons. The United States, followed by Japan, and Hong Kong, continues to be the primary market for shipments. Anticipated lower shipments by Oceania to the United States in 2016 will enable Mexican shipments to remain strong despite lower U.S. import demand. Improvements in the quality, food safety, and sophistication of Mexican beef operations have facilitated increased Mexican exports over the past several years.

Meat, Beef and Veal

2014

2015

2016

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

Mexico

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Slaughter (Reference)

6000

6000

6035

5975

5965

5965

Beginning Stocks

0

0

0

0

0

0

Production

1827

1827

1845

1850

1865

1865

Total Imports

206

206

165

175

165

165

Total Supply

2033

2033

2010

2025

2030

2030

Total Exports

194

194

245

228

300

250

Human Dom. Consumption

1829

1829

1755

1792

1720

1770

Other Use, Losses

10

10

10

5

10

10

Total Dom. Consumption

1839

1839

1765

1797

1730

1780

Ending Stocks

0

0

0

0

0

0

Total Distribution

2033

2033

2010

2025

2030

2030

(1000 HEAD) ,(1000 MT CWE)

Animal Numbers, Swine

Production:

Continued recovery from porcine epidemic diarrhea (PED) and improved control efforts combined with investments in herd improvements will spur production 7 percent higher to 19.2 million head in 2016. Increasing productivity (pigs per sow) due to continually improving genetics and enlargement of the breeding herd will enable significant expansion during 2016. Ending inventories are forecast to reach a record 10.7 million head.

Commercial farms continue addressing PED challenges and are operating with improved biosecurity measures to control its spread. To date, virus control efforts have been relatively successful, though the threat remains.

Improved genetics combined with lower feed prices continue contributing to lower production costs across the production chain.

Trade:

Imports consist mainly of swine with new breeding lines aimed at increasing the number of weaning piglets per litter to offset the after effects of the PED outbreak. Imports will decline in 2016 to 25,000 head following significant breeding swine purchases in 2015.

Animal Numbers, Swine

2014

2015

2016

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

Mexico

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Total Beginning Stocks

9775

9775

9700

9700

9600

9917

Sow Beginning Stocks

1160

1160

1150

1150

1180

1180

Production (Pig Crop)

17600

17600

17850

18000

19000

19200

Total Imports

14

14

50

42

50

25

Total Supply

27389

27389

27600

27742

28650

29142

Total Exports

0

0

0

0

0

0

Sow Slaughter

15

15

15

15

15

15

Other Slaughter

16805

16805

17300

17100

17535

17685

Total Slaughter

16820

16820

17315

17115

17550

17700

Loss

869

869

685

710

700

740

Ending Inventories

9700

9700

9600

9917

10400

10702

Total Distribution

27389

27389

27600

27742

28650

29142

Meat, Swine

Production:

Production is forecast 7 percent higher to a record 1.38 million tons on increased slaughter and heavier weights. Improvement in the breeding herd has bolstered productivity spurring greater slaughter-ready supplies. Relatively low feed prices and new breeding lines have driven weights higher.

Consumption:

Consumption is forecast at 2.33 million tons, supporting generous growth in per capita consumption which is expected to reach nearly 19 kilograms. Rising consumption will be supported by both increased production and imports. Pork remains a lower cost alternative to beef as well as price competitive with poultry meat. As consumers are increasingly aware that swine production systems are as reliable as those in the poultry and beef sectors, pork continues to gain consumer confidence as a healthy source of protein.

Trade:

Imports are forecast at 1.1 million tons. Although Mexican production is forecast higher, it is unable to keep pace with rising consumption, generating strong import demand. Mexico's pork imports will remain hams and picnics as well as mechanically deboned meat (MDM) from the United States. Despite the strong dollar, an expected decline in U.S. pork prices will continue to spur shipments.

Exports are forecast at a record 150,000 tons. Mexico recently received recognition from Japan as free of Classical Swine Fever (CSF) and is now able to export pork from all states. Japan remains Mexico's top market by volume and value – a situation that is not expected to change. In addition, Mexico continues to pursue the development of other export markets in Asia.

Meat, Swine

2014

2015

2016

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

Mexico

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Slaughter (Reference)

16820

16820

17315

17115

17550

17700

Beginning Stocks

0

0

0

0

0

0

Production

1290

1290

1335

1323

1385

1385

Total Imports

818

818

920

981

960

1100

Total Supply

2108

2108

2255

2304

2345

2485

Total Exports

117

117

130

128

150

150

Human Dom. Consumption

1991

1991

2125

2176

2195

2335

Other Use, Losses

0

0

0

0

0

0

Total Dom. Consumption

1991

1991

2125

2176

2195

2335

Ending Stocks

0

0

0

0

0

0

Total Distribution

2108

2108

2255

2304

2345

2485

(1000 HEAD) ,(1000 MT CWE)

Policy:

In late 2015 a USDA Animal and Plant Health Inspection Service (APHIS) delegation corroborated Mexico's improved Classical Swine Fever (CSF) disease status. As part of the protocol, APHIS has determined to recognize all Mexican states, including Chiapas, as free of CSF. However, for a full recognition, the risk analysis must conclude before the official notification is to be published by mid-2016. Initially, the state of Chiapas was outside the negotiation.