OILSEED PRODUCTION

The Post/New MY 2015/16 total Mexican oilseed production forecast is decreased slightly to 482,000 metric tons (MT) based on a slight decrease in harvested area. Private sources stated that despite domestic supports offered by the Mexican Government (which is expected to continue in 2015); the bearish international market outlook for oilseeds may discourage growers from increasing planted area this year. As a result, domestic production will continue to represent only 7.7 percent of total domestic consumption, as imports continue to displace much of the domestic oilseed production. Almost all oilseed imports to Mexico originate from the United States.

Post/New estimate of total oilseed production for MY 2014/15 has been increased to 491,000 MT based on recent official government information from the Secretariat of Agriculture, Livestock, Rural Development and Fishery (SAGARPA) and reflecting higher planted and harvested areas than previously estimated as well a favorable weather conditions. Similarly, the Post/New estimated total oilseed production for MY2013/14 has been revised downward to 349,000 MT from the USDA/Official estimate, due to final government information. Based on official data, approximately 12,000 hectares (ha) of genetically engineered (GE) soybeans, for commercial purposes, were planted in Mexico during the 2014 spring/summer crop cycle.

Soybean Production

The Post/New MY 2015/16 (September to August) soybean production forecast is raised to 360,000 MT due to a slight expansion in planted area and assuming that normal weather conditions will prevail. Moreover, it is expected that the governmental Pro-Oilseeds Program will continue for the foreseeable future, which should continue to slightly stimulate domestic soybean production.

For MY 2014/15, Post/New total soybean production, planted, and harvested areas have been revised upward from USDA/Official estimates based on updated official figures from SAGARPA. Industry sources stated that as a result of an outbreak of a sugarcane aphid (Melanaphis sacchari) that has negatively affected sorghum yields, many growers in some regions of North Tamaulipas, decided to shift from sorghum and plant soybeans. Sources noted that the National Institute of Forestry, Agriculture and Livestock (INIFAP) –a decentralized agency of SAGARPA, implemented a training and technology program that provides technical assistance to growers and encourages them to produce more soybeans in the Tamaulipas area. Reportedly, INIFAP developed a soybean variety that supposedly favors climate conditions in Tamaulipas regions, as well as other states, that is resistant to several pests and disease. Moreover, the soybean variety claims to be best suited for the spring/summer crop cycle which typically would be harvested in the August-September timeframe and timed usually just before the U.S. soybean crop is available for export.

Tamaulipas produces the largest portion of Mexico's soybean crop. Also, one of the main soybean crushing companies in Mexico has been contracting for a significant percentage of Tamaulipas' expected harvest (approximately 160,000 MT) from growers participating in the INIFAP program. In February 2015, SAGARPA and the crushing company signed a cooperation agreement to promote the cultivation of 2,000 ha of soybeans in Tamaulipas. As part of this agreement, SAGARPA provides the growers with improved seeds, technical assistance and a hedging scheme for soybean marketing.

For MY 2013/14, Post/New total soybean production and harvested area have been revised downward from the USDA/Official estimate based on final SAGARPA data.

As a part of the authorization to allow commercial plantings of genetically engineered (GE) soybeans granted by the National Health, Food Safety and Food Quality Service (SENASICA) on June 6, 2012, Mexico planted 11,961 hectares of GE soybeans in the 2014 spring/summer crop cycle. Below is a table with a breakdown of the area planted, by region, to GE soybeans:

Genetically-Engineered

Soybean Planted Area

Crop Cycle: 2014 Spring/Summer

Liberalization Stage: Commercial

Region

Hectares

Yucatan Peninsula

7,374.3

Chiapas

2,866

Huasteca

1,721

Total

11,961.30

Source: SAGARPA/SENASICA

Sunflower Seed Production

The Post/New MY 2015/16 sunflower seed production is forecasted to decline to 16,000 MT, due to a reduction in planted area. The production, planted, and harvested figures for MY 2014/15 have been revised upward from USDA/Official estimates reflecting the latest Mexican government data published by SAGARPA. According to private sources, one of the major multinational seed company's began a project to promote the expansion of commercial sunflower production in Mexico. The project aims to create a sustainable Mexican market for sunflowers. Reportedly, the seed company, along with the Extension Service, is providing grower assistance which began with experimental and demonstration sunflower fields in 2014 in various states, including Tamaulipas. At the same time, the multinational seed company has been in discussions with several leading crusher companies regarding this project with a goal to increase sunflower production in Mexico. As a result, six crushers have shown interest to crush sunflower seed harvested domestically and following the international trend of producing vegetable oil with high oleic content. On the other hand, private sources indicated this project's main challenge is to convince farmers to plant this particular oilseed. Some growers reportedly are reluctant, mainly due to the lack of knowledge about proper sunflower crop production practices, including planting densities, appropriate dates for sowing, as well as adequate pest and disease management. As a result, official and private sources estimate that the planted sunflower area could decline slightly in MY2015/16. Also, most private industry sources report that they consider SAGARPA official sunflower seed production data for MY 2014/15 as very optimistic.

Peanut Production

The Post/New MY 2015/16 (September to August) peanut production is forecast at 104,000 MT with harvested area, assuming normal weather conditions, estimated at 60,000 ha. Reportedly, peanut producers are experiencing favorable growing conditions in MY 2014/15 and should increase slightly or at least maintain similar planted area and production to levels consistent with the long-term average for the past few years. This assumes that enough moisture is available for next summer's planting and that market prices remain attractive. Industry sources stated that peanut production has remained relatively stagnant over in the last few years due to several factors, including lack of seed for planting and lack of a specific support program from SAGARPA for peanut growers. Moreover, growers have little or no access to financial credit or much needed peanut processing equipment. Private sources noted that another factor that has held back peanut planted area is that Mexican peanut growers cannot effectively compete against better quality imported U.S. peanuts.

The Post/New peanut production area estimate for MY 2014/15 has been revised slightly upward from USDA/Official estimates, based on SAGARPA's updated information and reflecting slightly greater planted and harvested areas than previously estimated. It should be noted that SAGARPA publishes official peanut production data just once a year. The spring/summer peanut crop cycle is planted from March to April and the fall/winter crop cycle is planted from September to October. Approximately 85 percent of total peanut production continues to take place in seven Mexican states: Sinaloa, Chihuahua, Chiapas, Puebla, Oaxaca, Guerrero, and San Luis Potosi.

Weather, given that 98 percent of Mexico's peanut area is grown on dry land (versus irrigated), continues to be the predominant crop factor. As in the past, the 2014 spring/summer crop cycle is expected to account for approximately 96 percent of total production.

Rapeseed Production

The Post/New MY 2015/16 rapeseed production is forecast to remain unchanged at only 2,000 MT. Both official and private sources reiterated that there are still problems that limit the production of rapeseed (canola) in Mexico, such as the lack of:

  • Domestic seeds with high yields
  • Proper equipment, including suitable planters and harvesters
  • Training and technical assistance
  • Favorable climate conditions in Mexico's oilseed producing regions

Post's total rapeseed production estimate and planted and harvested areas for MY 2013/14 and MY 2014/15 have been revised upward from USDA/Official estimates due to more complete data from SAGARPA.

OILSEEDS CONSUMPTION

The Post/New MY 2015/16 total oilseed consumption forecast is 6.2 MMT, a 3 percent increase from the revised previous marketing year forecast. This increase in domestic demand is attributed to expected economic growth in Mexico. According to private analysts, growth prospects for Mexico remain fairly positive despite the persistent downside risks to the 2015 outlook. Recently, lower oil prices prompted the Mexican government to announce a series of budget cuts, which are equivalent to 0.7 percent of GDP. However, these private analysts expect that the cuts will have only a marginal impact on growth. Analysts have lowered their 2015 GDP growth forecast by 0.2 percent. Private analysts expect the Mexican economy to expand approximately 3 percent in 2015, while for 2016 they forecast a 3.5 percent expansion.

Based on this macro-economic prediction, consumer purchasing power could increase slightly. This bodes well as Mexican consumers will be more likely to increase their consumption of products containing vegetables oils, such as soybean and canola oils. Moreover, the expected rise in crushing is supported by the growing demand for healthy edible oils, mainly in the cooking oil segment. Industry sources indicated that it's primarily the integrated companies that have crushing facilities, refined vegetable oils, and service different market segments. These are the companies most likely to increase investments in their facilities. Similarly, these sources estimate that Mexico will remain a net importer of oilseeds in the foreseeable future, and the United States will continue to be the principal supplier.

MY 2013/14 and MY 2014/15 total oilseeds demand was revised upward from USDA/Official estimates based on industry sources.

Soybean Consumption

Soybean consumption is expected to increase by 150,000 MT in MY 2015/16 to 4.4 MMT because of increased feed demand, stronger processor demand, and population growth (1.2 percent). For example, according to the animal feed compound industry, this sector expects to grow 2.8 percent in 2015. The poultry sector 2015 outlook is especially optimistic. This sector continues to be the major consumer of oilseed meal, especially soybean meal.

Peanut Consumption

Peanut consumption is forecast to increase slightly to 254,000 MT for MY 2015/16 as the snack food market is expected to continue growing. Approximately 98 percent of total peanut consumption continues to be in the snack food market, and of this total nearly 10 percent is consumed as in-shell peanuts, which are sold as seasonal treats (e.g. at Christmas) and stuffed into traditional piñatas. Private sources pointed out that despite the new 5 percent tax passed at beginning of 2014 as part of the Fiscal Reform proposed by the Mexican President and approved by the Congress, Mexican peanut consumption has continued growing. One of the main arguments for this increase is the fact that consumers look for tasty, affordable and convenient products that are considered more as an impulse purchase.

Industry sources reiterated that none of Mexico's peanut production is used for oil or meal. The crush demand is forecast to remain unchanged at 4,000 MT in MY 2015/16. Also, the main peanut processors, such as Sabritas (Mafer), Barcel, Nippon, Botanas Bokados, Botanas Leos, Botanas Encanto, Michel and Nishikawa continue to purchase U.S. peanuts instead of from domestic production or other origins. Most peanut processors identify U.S. peanuts as a high quality product in terms of flavor, shelf life, low aflatoxin levels, and low foreign material content. There are also numerous small and medium informal peanut processors that acquire peanuts from distributors/importers and process peanut snack as artisans.

Sunflower Seed Consumption

MY 2015/16 sunflower seed consumption is forecast to increase to 34,000 MT. Despite that over the past few years only a small amount of total sunflower seed production has been used for oil and meal, this trend is expected to be reversed as a result of a multinational seed company working on a project that seeks to increase sunflower seed domestic production. Another factor that should impulse the increase in domestic consumption is the expected growth in the snack food market, as mentioned above. Like peanuts, sunflowers are consumed mainly by way of the snack food market sector and as bird feed. Post/New MY 2013/14 and MY 2014/15 estimates for sunflower seed consumption have been revised upward from USDA/Official data based on private information and stronger demand from the confection, snack, and bird feed sectors.

Rapeseed Consumption

The forecast for rapeseed consumption in MY 2015/16 is expected to increase slightly to 1.52 MMT, or 2.0 percent. Private sources commented that Mexican crushers have a market for canola oil and they will import canola when the price is competitive.

OILSEED TRADE

Soybeans continue to be the primary oilseed imported by Mexico which is then crushed domestically. This trend is expected to continue in the foreseeable future. The Post/New total oilseed import forecast for MY 2015/16 is estimated to increase to 5.74 MMT, a 1.5 percent increase in comparison with the Post/New revised estimated of MY 2014/15. This increase is driven by population growth (1.2 percent) and the expected growth in Mexico's livestock and poultry sectors.

Some industry sources have expressed concern that due to the stronger U.S. dollar value that has been setting multi-year highs, this trend could play a key role in increasing sluggish demand for Mexican imports of oilseeds. On the other hand, private analysts indicated that the leading companies regularly set up hedging contracts, including exchange rate coverage, which could mitigate the adverse effect of the volatility in the exchange rate. Another factor that could also help to compensate for the strong dollar is the expected bearish international soybean market in MY 2015/16. The United States is expected to continue to be the main supplier of soybeans to Mexico in the future.

Soybean Trade

Soybean imports are expected to increase 50,000 MT in MY 2015/16 to 4.05 MMT because of the moderate increase in feed demand, strong processor demand and general population growth. Regarding animal feed demand, Post expects to see growing demand from poultry producers assuming that beef prices continue to rise, making poultry meat one of the cheapest animal protein sources for Mexican consumers.

Peanut Trade

Fueled by the continued demand from the snack and confection sectors, the Post/New total peanut import forecast for MY 2015/16 is expected to increase approximately 2 percent to 160,000 MT. The peanut export forecast for MY 2015/16 is 16,000 MT. The peanut import estimate for MY 2013/14 has been revised upward from USDA/Official data based on Global Trade Atlas (GTA) trade data and reflecting the good U.S. peanut crop that allowed affordable prices for imported U.S. peanuts. According to private analysts, the U.S continues to be the main supplier of imported peanuts due to Mexican processors identification of the U.S. peanut as a high quality product, and as their preference, primarily because of the high oleic acid levels. Processors also consider it a tastier legume.

Rapeseed Trade

The Post/New MY 2015/16 rapeseed import forecast is estimated to increase 2 percent to 1.52 MMT over the Post/New MY 2014/15 estimate. This increase assumes a relatively bearish international market due to the possibility of a good rapeseed (canola) crop in Canada, which continues to be the primary supplier to the Mexican market. The MY 2013/14 Post/New rapeseed import estimate has been revised upward from previous estimates based on revised GTA data.

Sunflower Trade

Imports of sunflower seed are forecast to increase to 17,000 MT for MY 2015/16 as the fried snack industry will continue demanding the sunflower oil due to its high content of heart-healthy oleic oil for cooking potato chips, biscuits, nuts, and other snacks. The Post/New sunflower import and export estimate for MY 2013/14 have been revised upward based on revised GTA data.

OILSEED POLICY

Pro-Oilseeds

SAGARPA continued with the subsidy program to encourage the domestic production of oilseeds. Initially know as Pro-Oilseeds Program, it was renamed by SAGARPA in 2014 as "Package of Technological Incentive for Oilseeds". However, the majority of oilseed industry members continue to call this Program Pro-Oilseeds. The main purpose of this program is to increase the production of oilseeds and encourage planting of alternative crops to improve producer income. The Program offers technical assistance to help increase seed planting density, promote the use of fertilizers and other improvements in plant nutrition, and encourage proper and efficient technological applications for phyto-sanitary controls.

In general, the Program objective is to increase production and productivity of soybeans, safflower, canola, sunflower and sesame in order to increase the country's supply of domestic oilseeds and provide production alternatives, all with the purpose of improving farmer's income. Among the programs more specific objectives:

  • Recommend more production of basic grains in the main producing areas of the country as classified by the INIFAP,
  • Adequately supply the oilseed domestic demand,
  • Reduce oilseed imports.

The program provides support to oilseed producers for up to 1,500 pesos per ton of oilseeds (approximately 100.30 U.S. dollars per ton) if sold to the domestic vegetable oil industry, or domestic livestock feed mill and manufactures. The program has a production limit of 100 hectares of oilseeds, cultivated in irrigated areas or equivalent production in non-irrigated areas (per grower), capped at 750,000 pesos per grower (roughly 50,167 U.S. dollars). According to official and private sources, the Pro-Oilseeds Program operated from 2009 to 2013 helping to increase area and production of oilseeds throughout Mexico. In addition, the current SAGARPA administration agreed to renew the program for the period 2013-2018. Recently, SAGARPA stated that were allocated 370 million pesos (approximately 24.7 U.S. million dollars) for this Program in CY 2015.

Forward Contract Program

SAGARPA continued to encourage forward contract purchases between farmers and buyers through the "Forward Contract Program", Agricultura por Contrato. In calendar year 2014, forward contract schemes were implemented for producers, traders and other end-users of corn, wheat, sorghum and soybeans. This program is a subsidy system based on market prices and tools that facilitates price stability, merchandising, and marketing for Mexican producers. The Forward Contract Program includes a complex mechanism to purchase input and call options for grains and soybean growers and the processing industry. Moreover, the program mechanism is based on world prices, thereby diminishing the risk of the subsidy system being defined as price distorting. Over the recent agricultural cycles this program has shown an increase in the volume of grains and feed registered, mainly in the fall/winter crop cycles.

According to SAGARPA through to its paying agency "Agency of Marketing Services and Development of Agricultural Markets" (ASERCA), in calendar year 2014 the Forward Contract Program granted supports for the marketing of approximately 20 MMT of different commodities, mainly corn (white and yellow), sorghum, wheat (for bread-making varieties and durum) and soybeans. Nearly 301,488 participants (farmers and companies), 232,924 growers and 68,564 buyers benefited from this program. ASERCA also stated that the Forward Contract Program has become the key instrument to promote more effective marketing of grain and oilseeds, fostering a business culture that includes mechanisms for risk management and grower's income protection.

PROAGRO

Starting in January 2014, the new PROAGRO Productive support program was initiated (before known as PROCAMPO). The new program grants direct supports to growers with farms in operation that are appropriately registered in the PROAGRO directory. According to SAGARPA, previously under PROCAMPO guidelines, supports were allocated only under a condition of ownership - not on actual production. However, PROPAGRO Productive aims to promote agricultural production and promote a more productive, competitive and fair implementation for the countryside. Depending on the grower's level of farming operation as well as regional conditions, PROAGRO Productive supports can be channeled to training, technical assistance, mechanization, use of improved seeds or selected Creole seeds, plant nutrition, productive reconversion, crop insurance and price hedging, among others. The main change in the new PROAGRO Productive is that growers must now validate the destination of the support to acquire the concepts outlined above, whereas in the previous program (PROCAMPO) the supports were granted (in pesos per planted hectare) unconditionally.

Under PROAGRO Productive, a flat rate payment for oilseeds will be provided to growers for 2015 spring/summer and 2015/2016 fall/winter crop cycles. Also, SAGARPA indicated that the supports will be granted based on the size of the production unit as follows:

  • Subsistence (up to five hectares of non-irrigated land and 0.2 hectares of irrigated land)
  • Transition (greater than 5 hectares and up to 20 hectares non-irrigated land and greater than 0.2 hectares and up to five hectares of irrigated land), and
  • Commercial (more than 20 hectares non-irrigated and more than 5 hectares irrigated).

The Subsistence growers will receive a support payment per hectare or portion of 1,300 pesos (approximately 87 U.S. dollars/ha). If they have three hectares of non-irrigated land and are located in the municipalities served by the "National Program Mexico Without Hunger" Program, they will receive 1,500 pesos (near 100.33 U.S. dollars/ha). Growers who fall into the other two categories (Transition and Commercial) will receive 963 pesos per hectare (64.41 U.S. dollars/ha).

Also, responding to demands from various grower organizations about low commodity prices and the need for more assistance at the farm level, on November 27, 2014, ASERCA announced updated price levels associated with the Income Target Price Program.

Mexico: Production, Supply, and Distribution (PSD) for Total Oilseeds

Total Oilseed

Market Begin Year

2013

2014

2015

Mexico

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Planted

236

242

237

268

0

270

Area Harvested

220

220

225

251

0

250

Beginning Stocks

146

146

172

199

0

266

Production

359

349

394

491

0

482

MY Imports

5461

5500

5712

5662

0

5747

MY Imp. from U.S.

3500

3522

3742

3717

0

3777

MY Imp. from EU

50

0

50

0

0

0

Total Supply

5966

5995

6278

6342

0

6495

MY Exports

15

15

15

15

0

16

MY Exp. to EU

0

0

0

0

0

0

Crush

5499

5501

5760

5774

0

5955

Food Use Dom. Cons.

242

242

243

245

0

250

Feed Waste Dom. Cons.

38

38

42

42

0

42

Total Dom. Cons.

5779

5781

6045

6061

0

6247

Ending Stocks

172

199

218

266

0

232

Total Distribution

5966

5995

6278

6342

0

6495

1000 HA, 1000 MT

Mexico: Production, Supply, and Distribution (PSD) for Soybeans

Oilseed, Soybean

2013/2014

2014/2015

2015/2016

Market Begin Year

Sep 2013

Sep 2014

Sep 2015

Mexico

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Planted

179

179

180

193

0

195

Area Harvested

159

158

165

176

0

175

Beginning Stocks

100

100

131

118

0

184

Production

254

241

290

355

0

360

MY Imports

3,842

3,842

4,050

4,000

0

4,050

MY Imp. from U.S.

3,383

3,383

3,625

3,600

0

3,650

MY Imp. from EU

0

0

0

0

0

0

Total Supply

4,196

4,183

4,471

4,473

0

4,594

MY Exports

0

0

0

0

0

0

MY Exp. to EU

0

0

0

0

0

0

Crush

4,030

4,030

4,250

4,250

0

4,400

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

35

35

39

39

0

39

Total Dom. Cons.

4,065

4,065

4,289

4,289

0

4,439

Ending Stocks

131

118

182

184

0

155

Total Distribution

4,196

4,183

4,471

4,473

0

4,594

1000 HA, 1000 MT

Mexico: Production, Supply, and Distribution (PSD) for Sunflower Seed

Oilseed, Sunflower seed

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

Oct 2015

Mexico

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Planted

0

4

0

15

0

13

Area Harvested

4

4

3

15

0

13

Beginning Stocks

0

0

2

7

0

12

Production

5

5

4

23

0

16

MY Imports

15

22

15

15

0

17

MY Imp. from U.S.

7

15

7

7

0

8

MY Imp. from EU

0

0

0

0

0

0

Total Supply

20

27

21

45

0

45

MY Exports

0

0

0

0

0

0

MY Exp. to EU

0

0

0

0

0

0

Crush

15

17

16

30

0

31

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

3

3

3

3

0

3

Total Dom. Cons.

18

20

19

33

0

34

Ending Stocks

2

7

2

12

0

11

Total Distribution

20

27

21

45

0

45

1000 HA, 1000 MT

Mexico: Production, Supply, and Distribution (PSD) for Peanuts

Oilseed, Peanut

2013/2014

2014/2015

2015/2016

Market Begin Year

Sep 2013

Sep 2014

Sep 2015

Mexico

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Planted

57

57

57

58

0

60

Area Harvested

57

56

57

58

0

60

Beginning Stocks

23

23

16

34

0

28

Production

100

100

100

101

0

104

MY Imports

154

172

157

157

0

160

MY Imp. from U.S.

90

97

90

90

0

91

MY Imp. from EU

0

0

0

0

0

0

Total Supply

277

295

273

292

0

292

MY Exports

15

15

15

15

0

16

MY Exp. to EU

0

0

0

0

0

0

Crush

4

4

4

4

0

4

Food Use Dom. Cons.

242

242

243

245

0

250

Feed Waste Dom. Cons.

0

0

0

0

0

0

Total Dom. Cons.

246

246

247

249

0

254

Ending Stocks

16

34

11

28

0

22

Total Distribution

277

295

273

292

0

292

1000 HA, 1000 MT

Mexico: Production, Supply, and Distribution (PSD) for Rapeseed

Oilseed, Rapeseed

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

Oct 2015

Mexico

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Planted

0

2

0

2

0

2

Area Harvested

0

2

0

2

0

2

Beginning Stocks

23

23

23

40

0

42

Production

0

3

0

2

0

2

MY Imports

1,450

1,464

1,490

1,490

0

1,520

MY Imp. from U.S.

20

27

20

20

0

28

MY Imp. from EU

50

0

50

0

0

0

Total Supply

1,473

1,490

1,513

1,532

0

1,564

MY Exports

0

0

0

0

0

0

MY Exp. to EU

0

0

0

0

0

0

Crush

1,450

1,450

1,490

1,490

0

1,520

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

0

0

0

0

0

0

Total Dom. Cons.

1,450

1,450

1,490

1,490

0

1,520

Ending Stocks

23

40

23

42

0

44

Total Distribution

1,473

1,490

1,513

1,532

0

1,564

1000 HA, 1000 MT