Mexico. Oilseeds and Products Annual. Apr 2013 May 8, 2013
The Post New MY2013/14 total Mexican oilseed production forecast is increased to 402,000 metric tons (MT) based on assumed normal weather conditions and an expansion in harvested area that is being stimulated by a governmental domestic support program. The support program provides oilseed growers up to 1,500 pesos/MT (approximately $118/MT) if their oilseed crop is sold to domestic oil industry processors or livestock feed mills and manufacturers. Domestic oilseed production represents only about 7 percent of total domestic consumption as imports have displaced much of the domestic production. Due to proximity, U.S. oilseed suppliers should remain price competitive with increased opportunities to Mexico. For MY 2013/14, U.S. oilseed market share is expected at about 66 percent, which is higher than the level reached in MY 2012/13 (63 percent).
The Post/New MY 2013/14 total Mexican oilseed production is forecast to increase to 402,000 metric tons (MT) based on assumed normal weather conditions, increased harvested area, as well as being stimulated by a governmental domestic support program called Pro-Oilseeds. The Pro-Oilseeds program provides support to oilseed growers for up to 1,500 pesos per ton of oilseeds (about U.S. $ 118 per ton) if growers sell their crop to domestic vegetable oil industry processors or livestock feed mills and manufactures. In June 2012, the Mexican government authorized 253,000 hectors of genetically modified (GM) soybeans for commercial cultivation.
Despite the forecasted increase in oilseed production, domestic production still only represents about 7 percent of total domestic consumption. Oilseed imports, for the most part, have effectively displaced domestic oilseed production with the majority of all oilseed imports coming from the United States. Due to proximity and lower freight costs, U.S. suppliers should remain price competitive with prolonged import opportunities to the Mexican oilseed market.
The Post/New estimated production and harvested area for MY 2011/12 have been revised slightly upward and downward respectively, due to final official government information released by the Secretariat of Agriculture, Livestock, Rural Development and Fishery (SAGARPA). The Post/New estimate for total oilseed production, planted and harvested areas for MY 2012/13 have been adjusted upward and downward respectively, based on recent official government information.
Again this year, SAGARPA’s Food and Fisheries Statistics Service (SIAP) has been releasing information about oilseed and grains production, imports, exports, domestic consumption and stocks through its website called “Availability-Consumption Balance (ACB)”. However, reportedly various industry and trade sources have disagreed with some of the figures, mainly in the area of consumption and stocks.
The Post/New MY 2013/14 (September to August) soybean production forecast is raised to 280,000 MT, or 12 percent higher than the revised production estimate of MY 2012/13. The main factors behind this increase are a slight expansion in harvested area and the assumption normal weather conditions will prevail. In addition, the governmental Pro Oilseeds Program is expected to continue for the foreseeable future (see Oilseeds Policy Section).
FAS/Mexico revised its MY2012/13 soybean production estimate upward to 250,000 MT from USDA/Official estimates based on updated official figures from SAGARPA. According to official sources, despite the fact planted and harvested areas were lower than previously estimated, favorable precipitation provided beneficial soil moisture to boost yields for the 2012 spring/summer crop cycle, mainly in the non-irrigated areas of Tamaulipas. These sources also stated that although the rainy season was irregular, it was substantially better compared to last season when Mexico was adversely affected by a severe drought. As a result, in the 2012 spring/summer crop cycle, Tamaulipas reached a yield of 1.4 MT/ha in non-irrigated soybean areas compared to a yield of only 0.83 MT/ha for the same crop cycle the year before. The state of Tamaulipas continues to produce the largest portion of Mexico'ssoybean crop. For MY 2011/12, Post/New total soybean production has been revised upward from the USDA/Official estimate based on final SAGARPA data.
On June 6, 2012, the National Health, Food Safety and Food Quality Service (SENASICA) announced its decision to allow commercial plantings of enough transgenic soybean seed to potentially cover a surface area of 253,000 hectares, including the use of 13,075 metric tons of GE seed in the states of Campeche, Quintana Roo, Yucatan, Tamaulipas, San Luis Potosi, Veracruz and Chiapas. GM soybeans had only previously been planted under experimental and pilot stages in Mexico (see 2012 GAIN Report MX2051 “Mexico Cautiously Moves Forward with Biotechnology”).
Mexican honey producers, however, have expressed great concern with the government’s approval of GM soybeans for commercial production – particularly since the European Court of Justice ruled that honey which contains trace amounts of pollen from GM crops authorized for human consumption in the EU - must be labeled if the amount of GM pollen surpasses 0.9 percent. Because of this ruling, and now that GM soybeans may be planted commercially in Mexico, all honey shipments from Mexico must undergo laboratory testing to identify and quantify the type of GM presence. As a result, Mexican honey producers filed a court injunction against the approval of GM soybeans for commercial production. Private sources stated that due to this legal dispute, SAGARPA recommended growers do not plant these GM soybean varieties in the states of Campeche, Quintana Roo and Yucatan until this on-going issue is resolved. Sources stated that as a result of this issue, approximately 15,000 hectares were not planted to GM soybeans in 2012.
Despite strong domestic demand for soybeans and the continuation of the Pro Oilseeds Program, sources have stated it is unlikely a huge expansion of soybean plantings will take place next year due to the court injunction filed by honey producers against the production of commercially produced GM soybeans. Other factors inhibiting more soybean production are low yields and quality issues. Approximately 90 percent of Mexico’s soybean production areas are rain-fed, thus, weather continues to be the predominant factor. Some market analysts have argued, for example, that soybean production in Tamaulipas exists solely to support growers who take advantage of domestic support programs run by the Mexican government.
Post/New MY2013/14 peanut production is forecast to remain unchanged at 115,000 MT with harvested area, assuming normal weather conditions, estimated at 65,000 ha. The Post/New peanut production and planted area estimates for MY2012/13 have been revised upward from USDA/Official estimates, due to more complete data from SAGARPA. This ministry publishes official peanut data just once a year.
In Mexico, peanuts are planted mainly in April-May and generally harvested in the October-November timeframe. Approximately 86 percent of total peanut production takes 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. A small amount of peanuts are planted in a fall-winter crop cycle but accounts for only about 3 percent of total peanut production in Mexico.
Official sources stated that peanut producers in the main producing states of Chihuahua and Sinaloa are experiencing a good MY 2012/13 crop due to mostly favorable weather conditions. In the state ofSinaloa, for example, the rainy season during the spring-summer 2012 crop cycle got off to a good start. In fact, many Sinaloa growers were able to plant earlier than normal because adequate soil moisture levels were already in place. However, during September, the month that is considered critical for peanut production, there was virtually no rain. It was not until late September when tropical storm "Norman" hit and provided the area with much needed rainfall that helped increase yields and peanut sizes. According to official data, peanut yields in Sinaloa reached 1.8 MT/ha in the 2012 spring/summer crop cycle against only 0.57 MT/Ha in same season a year early. In October, however, untimely rains in certain areas of the state caused the damp peanuts to darken and lose quality. Despite the quality reduction, Sinaloa is expected to produce 23,600 MT of peanuts, compared with 11,209 MT last year.
The 2012 spring-summer peanut production outlook in the state of Chihuahua, according to industry sources, was good as the rainy season was not a problem for peanut growers, compared to the last year when the state suffered a severe drought. In general, peanuts require less water than others crops like corn and sorghum. Peanut farm-gate prices were more favorable this year for growers as private companies, such as Galdsia, purchased peanuts at higher prices compared to last year. In other parts of Chihuahua, such as the Yaqui Valley, peanut yields at harvest were very good. Official sources stated that in MY 2012/13 Chihuahua produced approximately 38,000 MT, which is 110 percent higher than the 2011 spring-summer crop cycle where average yields reached 4 MT/ha. The Post/New planted and harvested area estimates for the MY 2011/12 have been adjusted slightly upward and downward respectively, based on SAGARPA final information.
Sunflower Seed Production
The Post/New MY 2013/14 sunflower seed production forecast remains unchanged at 3,000 MT. The production figure for MY2012/13 has been revised downward from USDA/Official estimates reflecting the latest Mexican government data published by SAGARPA. According to both official and private sources, despite efforts to promote sunflower seed cultivation for some private companies (see 2012 Gain ReportMX2020 “Oilseeds Production Expected to Increase in 212/13”) and the supports of the Pro Oilseed Program (see Oilseeds Policy section) growers have decreased their interest in this particular oilseed. Factors for the decrease include unattractive prices and lack of knowledge about proper crop production practices that result in inadequate planting densities and inappropriate dates for sowing as well as inadequate pest and disease management.
The Post/New MY 2013/14 rapeseed production forecast remains unchanged. Post’s total rapeseed production estimate and planted and harvested areas for MYs 2011/12 and 2012/13 have been revised upward from USDA/Official estimates due to more complete data from SAGARPA. Similar to sunflower seeds, there are problems that limit the production of canola in Mexico, such as the lack of:
•domestic seeds with high yields
•proper equipment, including suitable planters and harvesters
•training and technical assistance.
The Post/New forecast for all oil meal production in MY 2013/14 is increased slightly to 3.786 MMT due to the expected moderate growth in the livestock sector. The poultry sector outlook, for example, is slightly optimistic for 2013 in comparison with 2012, this despite the recent high pathogenic avianinfluenza outbreaks in three Mexican states. Industry sources believe the poultry industry will be able to revamp production quickly after the outbreak (see 2013 GAIN Report MX3026 Broiler Meat 2012 Production and Trade Update). The poultry sector continues to be the major consumer of oilseed meals in Mexico. As in previous years, high-protein soybean meal accounts for approximately 77 percent of total Mexican oil meal production. Production of imported rapeseed and canola seed accounts for approximately 23 percent of total meal usage.
The Post/New total meal production estimates for MY 2011/12 and MY 2012/13 were revised upward from USDA/Official estimates, reflecting updated industry information. According to industry sources, many feed manufacturers changed feed formulas in response to increasing soybean prices, basically substituting soybean and soybean meal with canola and canola meal. As noted, Mexico's purchase decisions for oilseeds and oil meals continue to be based on price and the availability of credit.
Soybean Meal Production
The Post/New soybean meal production forecast for MY 2013/14 is 2.925 MMT, a slight increase of approximately 1 percent compared to the previous year due to expected moderate growth in the livestock and poultry sectors. The upward trend in meal production has continued over the last few years. As a result, some companies such as Ragasa have expanded their crushing capacity facilities, while others such as Bunge, for example, is building a new plant in Queretaro. Crusher capacity remains highly concentrated in hands of a few companies such as Aceites, Grasas y Derivados, Ragasa, Proteinas y Oleicos and Cargill. These companies have continued to invest in their crushing operations in Mexico, making them more efficient and better able to service the increased demand from the livestock sector. The Post/New soybean meal production estimates for MY 2011/12 and MY2012/13 have been revised upward, reflecting the strong demand from the livestock sector and updated industry information.
Rapeseed Meal Production
The Post/New rapeseed meal production for MY 2013/14 is forecast to increase 1.9 percent due to an expected increase in domestic pork production in 2013. The pork industry is a major consumer of rapeseed meal. The incorporation of new hog breeding lines, better farm management techniques, and increased slaughter weights has allowed production of more meat from fewer hogs. In addition, anticipated demand mostly driven by Asian customers is also pushing pork production higher (see GAIN Report MX6016 Pork Sector Appears Promising as Beef Sector Faces Challenges). In line with more recent information obtained from private sources, MY 2012/13 rapeseed meal production has been revised slightly upward from USDA/Official data.
Sunflower Seed Meal Production
Sunflower seed meal production is forecast to remain unchanged at 5,000 MT in MY 2013/14. The sunflower seed meal production estimate for MY 2012/13 has been revised downward from USDA/Official figures, due to new information from the industry sources.
Post/New total oil production is expected to increase by approximately 1.2 percent in MY 2013/14 to 1.260 MMT. Industry sources have indicated that the crushing pace continues to be largely determined by domestic demand for vegetable oils. Traditionally, this demand has been influenced by Mexico’s economic performance and its impact on consumer disposable income. Mexico’s economic growth isexpected to reach 3.6 percent in 2013. Private analyst’s state although slightly lower than 2012, this year’s economic growth rate is still optimistic compared to weaker global economic growth and the uncertainty in the U.S. economy. Mexico’s economic growth is expected to be driven by private consumption and investments (boosted by relatively stable inflation and more credit accessibility). The Post/New estimate of total Mexican oil production for MY 2011/12 and MY 2012/13 have been revised upward from USDA/Official estimates in accordance with updated industry information.
Private sources stated that the leading oil companies (such as Ragasa, AGYDSA, Cargill, La Corona, Proteinas y Oleicos, AAK and Oleofinos) have continued to invest in their production process facilities as well as in marketing campaigns and retail labels, all in an effort to better service the Mexican vegetable oil market. Companies such as Coral Internacional, Ragasa, Capullo and Olefinos have continued to package and market their own oil in the retail vegetable oil market sector. For example, pure soybean oil under the label “Nutrioli” has been bottled and marketed by Ragasa for many years. Similarly, Coral Internacional has the retail label “Oleico” (safflower oil). Other vegetable oil with retail brands such as“123” and Capullo are known to blend with rapeseed or canola oil. Many of these companies have successfully promoted vegetable oil as a healthy product and continue to enjoy strong consumer demand.
Soybean Oil Production
The Post/New soybean oil production estimates for MY2011/12 and MY2012/13 have been revised upward based on new industry information while reflecting the relatively affordable price of inputs the first year and a slightly favorable economic scenario in the second year. Soybean oil production is expected to continue to increase in MY 2013/14 totaling 660,000 MT, due to the relatively stronger demand from the domestic crushing industry. Industry sources also pointed out that the slight increase in salaries from some segments of population resulted in relatively higher disposable incomes. This trend should help allow Mexico’s edible oil market to increase slightly in MY 2013/14, mainly in the cooking oil and hotel, restaurant and institutional (HRI) sectors of the market.
Industry sources reported that crushers generally were operating at between 70 to 75 percent of capacity during 2012 due to better economic conditions. However, larger crushers that are also vegetable oil refiners were operating between 85 and 90 percent of capacity and some were operating at an even higher level. The large crushers account for more than 70 percent of total oil production and in the last few year have been investing heavily in their facilities. Reportedly, these large crushers have invested more than US $161 million in the last three years to modernize their domestic oilseed crushing and oil refining operations within their plants.
Rapeseed Oil Production
The New/Post MY2013/14 rapeseed oil production forecast is estimated to increase 9,000 MT to 595,000 MT from the Post/New 2012/13 revised estimated due to the slight growth in the Mexican economy, as already noted. The Post/New estimate for rapeseed oil production for MY 2012/13 has been increased to 586,000 MT from the USDA/Official estimate due to higher than expected crush levels.
Sunflower Seed Oil Production
The New/Post sunflower seed oil production estimate for MY2012/13 has been revised downward from USDA/Official estimates based on new industry information. For MY2013/14 the Post/New estimatefor sunflower seed oil production is expected to remain unchanged at 5,000 MT compared with the revised estimate of MY2012/13. The production of sunflower seed oil has remained generally stable over the last few years as alternative oilseeds continue to be more competitive.
Total domestic consumption of oilseed products for MY2013/14 is forecast to increase slightly to 5.485 million metric tons (MMT), an increase of 1.0 percent compared to the previous year’s revised estimate. This increase is driven by population growth (1.08 percent) and modest growth in the Mexican swine and poultry sectors.
Regarding oilseed consumption for feed, the poultry sector continues to be the major user, mainly in the form of oilseed meal and feed concentrates. During 2012, the poultry sector consumed 14.7 MMT of animal feed, of which 2.94 MMT was comprised of oilseed meal, 9.26 MMT consisted of corn, sorghum and wheat, and the remaining 2.49 MMT were other animal feed ingredients. Mexican broiler production should continue to increase slightly in 2013 in spite of disease issues and higher production costs that plagued the poultry sector during the second half of 2012 (see 2013 GAIN report MX3011 “First $1 Billion Poultry Market for American Exporters”).
Private analysts stated that the reason for only a slight increase in oilseeds consumption could be influenced by the relative slowdown in the Mexican economy. According the Central Bank of Mexico (Banxico), the Mexican economy will expand 3.6 percent in 2013, but that’s down from 3.9 percent in 2012. In addition, Banxico cut interest rates to a record low of 4 percent earlier in March 2013, arguing concerns about the global slowdown that could drag down Mexico’s economy. As a result, Mexican consumers likely will continue on a path of minimal changes to their consumption patterns for products containing vegetable oils, such as soybean and canola oil. Unchanged incomes should mean relatively stable or a slight increase in demand for convenience foods and other vegetable oil products. MY 2011/12 and MY 2012/13 total oilseeds demand was revised upward from USDA/Official estimates after consulting with market analysts and updated Mexican government data.
The Post/New MY 2013/14 soybean domestic consumption is forecast to increase slightly to 3.754 MMT as a result of the moderate increase in feed demand, relatively stronger processor demand and population growth. Moreover, this increase assumes more moderate prices than those registered in CY 2012. Post’s domestic soybean estimates for MY’s 2011/12 and 2012/13 have been revised upward from USDA/Official estimates based on most recent information of industry contacts.
The Post/New MY 2013/14, peanut consumption forecast is increased to 244,000 MT reflecting continued growth in the snack food market sector. Approximately 98 percent of total peanut consumption in Mexico comes from snack foods. According to private analysts, in the last few years, snacks sales have registered positive growth (approximately 3 percent) as consumers look for tasty, affordable and convenient products that are mostly impulse purchases. This growth trend is expected to continue in the long term in Mexico. Peanuts continue to be consumed as snacks or ground into powders. Industry sources stated 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.
There are numerous peanut processors located throughout Mexico. Some of the major brands include, Sabritas (Mafer), Barcel, and Nippon. Regional processors, such as Botanas Bokados, have a strong presence in the north and central regions of the country. Other important processors include Productos Michel and Nishikawa, which also process peanut snacks and have important regional market shares throughout the country. According to private sources, the majority of the main brands and processors are purchasing U.S. peanuts. They have identified U.S. peanuts as a high quality product in terms of flavor, shelf life, low aflatoxin levels, and low foreign material content. In addition, there are numerous small and informal peanut processors that acquire peanuts from distributors/importers and process peanut snacks as artisans. A smaller amount of peanuts continue to be sold in-shell, especially for specific seasons such as Christmas, where peanuts are used to stuff traditional “piñatas.” Private sources stated that the main channels of peanut distributions are small Mom & Pop stores.
Only a small amount of total sunflower seed production has been used for oil and meal over the past few years resulting in low consumption levels throughout the country. This trend is expected to continue in MY 2013/14. The Post/New MY 2013/14 forecast for sunflower seed total consumption is 19,000 MT. Post/New MY 2011/12 and MY 2012/13 estimates for sunflower seed consumption have been revised upward for MY2011/12 and downward for MY2012/13 from USDA/Official data. The information is based on private industrial sources and for MY2012/13 weaker demand from the snack and confection sectors.
According to private sources, one of the challenges that sunflower seed faces in Mexico is its relatively short shelf life compared with other snacks. On the other hand, the current trend of Mexican consumers moving toward natural and healthy snacks, including sunflowers, is starting to generate more opportunities for sunflower seed growth in the country. It should be noted that the increased knowledge about sunflower seed characteristics has been achieved through campaigns developed by the USA Sunflower Association in Mexico. For example, in 2012 this Association conducted a Generic Promotional Program in order to continue to increase consumer awareness and knowledge. During this promotion, various snacks were successfully promoted, including cereal bars, energy bars, cereals, grain breads and natural sunflower kernels that are sold bulk in the supermarket stores and central markets. Despite the current trend where some snack foods are placed within the category of “junk foods”, Mexican consumers overwhelming consider sunflower snacks as healthy and functional foods. Private analysts consider that while Mexican consumers learn how to balance their diets, including eating more produce and fruits instead of fattening foods, sunflower products could become one of the favorite healthy foods for Mexicans.
MY 2013/14 rapeseed consumption is forecast to increase 1.5 percent to 1.487 MMT reflecting the bearish international market outlook for this year. Market analysts have commented that Mexico remains a price sensitive market and industry users will switch between different oilseeds, oils, meals or other feed components as prices fluctuate. The rapeseed consumption estimate for MY 2012/13 has been revised upward based on the most recent information from industry contacts.
For MY 2013/14 consumption of all oil meal products is forecast to increase to 5.47 MMT, up 1.4 percent compared to the revised MY 2012/13 data. This increase reflects expected moderate growthfrom the livestock feed sector which is driven mainly by demand from the poultry and pork sectors. Imported oil meal products represent approximately 30.8 percent of Mexico’s total oil meal consumption, which is slightly higher than the previous two years. The Post/New total oil meal consumption estimates were revised upward in MY2011/12 and downward in MY 2012/13 from USDA/Official estimates reflecting the most recent industry data.
Soybean Meal Consumption
The Post/New soybean meal consumption estimate is expected to increase by 1.4 percent in MY 2013/14 assuming affordable prices prevail and that demand from the swine and poultry industries continue. In the case of the pork industry, for example, it is expected that higher live swine weights and better genetics will foster increased production in 2013 resulting in more demand for soybean meal. It is likely that soybean meal will continue to be the ingredient of choice for the poultry and swine industries that now hold approximately 68.2 percent of total meal consumption in Mexico. The soybean meal consumption estimate for MY 2011/12 has been revised slightly upward to 4.350 MMT from the USDA/Official estimate due to new information from the industry.
Sunflower Seed Meal Consumption
The sunflower seed meal consumption estimate for MY 2012/13 has been revised downward from the USDA/Official figure due to new information from industry sources. The Post/New sunflower seed meal consumption forecast for MY 2013/14 is expected to remain unchanged at 5,000 MT. Private analysts stated that sunflower seed meal continues to have a very low acceptance rate by the crushing industry and animal feed companies due mainly to its high content of fiber.
Rapeseed Meal Consumption
The MY 2013/14 Post/New rapeseed and canola consumption forecast is raised 1.54 percent to 990,000 MT. Rapeseed meal consumption is expected to continue gaining market share assuming affordable prices prevail for Canadian rapeseed imports in MY 2013/14 which are crushed domestically to produce the rapeseed meal. It is expected that canola and rapeseed meal will constitute approximately 18.3 percent of total meal consumption. Rapeseed meal continues to be used mainly by the swine sector.
The Post/New MY 2013/14 total oil consumption forecast is estimated to increase approximately 3.3 percent. This rise is driven by population growth and an expected increase in demand in specific retail market sectors. Total oil consumption figures for MY 2011/12 and MY 2012/13 have been revised downward from USDA/Official estimates due to lower than expected crush levels. Moreover, the contraction in MY 2011/12 reflects a relatively deteriorated consumer purchasing power level.
According to industry sources who state that although oil consumption remains strongly linked to price, middle and upper income consumer segments of the cooking oil market continue to be more aware of the positive health aspects of vegetable oils and willing to pay more. As a result, some big vegetable oil companies continue to invest in marketing campaigns at the retail level that promote the “good for your health” aspect of their vegetable oil products.
Soybean Oil Consumption
Soybean oil continues to be the dominant oil consumed in Mexico with a 58 percent share of total vegetable oil consumed. The Post/New soybean oil consumption estimate for MY2013/14 is forecast to increase to 900,000 MT or by 3.4 percent due to the expected growth in the Mexican economy and assuming that domestic prices continue stable.
Rapeseed Oil Consumption
The Post/New MY2013/14 rapeseed oil consumption forecast is increased to 660,000 MT due to market preference for this vegetable oil and considering the population growth. The Post/New consumption estimates for rapeseed oil for MY2011/12 and MY2012/13 remains unchanged from USDA/Official figures.
Sunflower Seed Oil Consumption
The Post/New sunflower oil consumption estimates for MY 2011/12 and MY2012/13 have been revised downward from USDA/Official data, reflecting updated information from industry sources. It is expected that sunflower oil consumption will remain unchanged in MY 2013/14 holding at 7,000 MT due to the expectation that alternative vegetable oils will continue to be more price competitive.
Edible Oil Prices
Domestic prices for edible oils have continued to increase over the past year except for soybean oil that registered a slight reduction.
The Post/New total oilseed import estimate for MY 2013/14 is expected to increase approximately 3.0 percent in comparison with the Post/New revised estimate for MY 2012/13. This is mainly due the expected moderate increase in economic growth, which could generate more demand for feed use and therefore more demand from oilseed processors. The Post/New total oilseed import estimates for MY 2011/2012 and MY 2012/13 have been revised upward for MY2011/12 and downward for MY2012/13 from USDA/Official estimates, reflecting data from the Global Trade Atlas (GTA) in the first MY and industry figures in the second MY. The second year also reflects the global supply soybean shortage and high international prices. Imports continue to be primarily soybeans that are then crushed domestically.
Mexico's oilseeds import decisions continue to be based on price and the availability of credit, rather than on quality or strong consumer preference. Moreover, several big and medium size oilseed processors continue to prefer to import oilseed meal and oils (crude or refined) directly instead of going through the process of crushing it in-country, especially if importing meal and oil prices are lower than the cost of crushing locally.
The United States and Canada will continue to be the main suppliers of oilseeds to the Mexican market. Due to proximity and lower freight costs, U.S. suppliers should remain price competitive with opportunities to increase their market share. For MY 2013/14, the U.S. share is expected to be approximately 65.9 percent, which is higher than the level reached in MY 2012/13 (63 percent).
The Post/New total soybean import forecast for MY 2013/14 is expected to increase approximately 4.5 percent compared to the revised MY 2012/13 estimate, reaching 3.45 MMT due to growing demand from the domestic poultry and pork sectors as well as population growth. The Post/New MY 2011/12 and MY 2012/13 soybean import estimates have been revised upward for MY2011/12 and downward for MY2012/13 from USDA/Official data and based on GTA trade data the first MY, while the second MY reflects a more bullish international soybean market.
The Post/New total peanut import forecast for MY 2013/14 is expected to decrease slightly to 130,000 MT due to the domestic production forecast which is expected to increase to a relatively high level compared with more average levels of production over the last few years. The export forecast for MY 2012/13 is expected to remain unchanged compared to the previous year at 2,000 MT. Peanut import and export estimates for MY 2011/12 and MY 2012/13 have been revised downward from USDA/Official data based on information from GTA for MY2011/12 and industry data for MY2012/13.
Industry sources stated that due to a bad U.S. crop last year Mexico imported peanuts from India in CY 2012 at very low prices. However, the quality of these imports was considered very poor. Reportedly, the peanuts contained high levels of aflotoxin content and had bad taste. Additionally, it was reported that several peanut importers lost money due to the fact that they could not process the peanuts properly. As a result, importers are expected to revert back to importing more U.S. peanuts in MY 2013/14. TopMexican peanut processors identified U.S. peanuts as a high quality product and as their preference primarily because of the high oleic acid levels and because it is a tastier legume.
The Post/New MY 2013/14 rapeseed import forecast is estimated to increase 2.1 percent over the Post/New MY 2012/13 estimate to 1.48 MMT. This increase assumes a relatively bearish international market due to expectations of a good Canadian canola crop in MY 2013/14. Canada remains the primary canola supplier to the Mexican market. Canola is included in the rapeseed production, supply, and distribution matrix. The MY 2011/12 Post/New rapeseed import estimate has been revised slightly upward from FAS/Official estimate based on GTA updated industry information. The Post/New MY 2012/13 import estimate has been remained unchanged from the FAS/Official figure.
Imports of sunflower seed are forecast to increase to 16,000 MT for MY 2013/14 as the fried snack industry is expected to continue demanding sunflower oil due to its high content of heart-healthy oleic oil for cooking potato chips, biscuits, nuts, and other snacks. Importers expect that sunflower import levels will remain relatively stable in the next few years due to a lack of domestic production. The Post/New sunflower import estimate for MY 2011/12 has been decreased to 14,000 MT based on revised GTA data.
The Post/New total meal import estimates for MY 2011/12 and MY 2012/13 have been revised downward from USDA/Official estimate, based on updated data from the Global Trade Atlas and discussions with official contacts. However, for MY 2013/14 the Post/New meal import forecast is increased slightly to 1.69 MMT driven by increasing demand from the poultry and swine sectors. Both sectors expect to have a relatively positive year in 2013. The United States continues to supply approximately 95 percent of total meal imports as it has done over the past few years.
Soybean Meal Trade
The Post/New soybean meal import estimates for MY 2011/12 and MY 2012/13 have been revised downward from USDA/Official data based on updated trade data from the GTA and reflecting the bullish international market. However, for MY 2013/14 the soybean meal import forecast is expected to increase 1.6 percent to reach 1.550 MMT reflecting a moderate increase in demand for soybean meal because of growth in the poultry and swine sectors and assuming competitive international prices.
Rapeseed Meal Trade
The Post/New rapeseed meal import estimate is expected to increase in MY 2013/14 to 135,000 MT reflecting expected stronger demand in the swine sector. Rapeseed and canola meal import estimates for MY 2011/12 and MY 2012/13 remained unchanged from USDA/Official figures.
The Post/New MY2013/14 total oil imports are forecast to increase slightly to 317,000 MT (an increase of less than one percent). This slight increase is complemented by the increase in domestic crushing in order to match total domestic edible oil consumption. The Post/New total oil import estimate forMY2011/12 has been revised slightly downward to 224,000 MT, according to updated trade information from the GTA.
Market analysts noted that as a result of the Mexican government’s decision to decrease applied duties on vegetables oils last September 5, 2012 (see Oilseed Policy section), crushers and oil refiners were very disappointed with that decision. The unilateral opening to imported edible oils by the Secretariat of Economy (SE) was rejected categorically by big and medium crushers and vegetable oil refiners. They argue that SE’s decision negatively impacts the business climate as it seriously jeopardizes investments already made by their companies and makes more difficult the creation and preservation of jobs in their industries. Moreover, they pointed out domestic crushers and oil refiners are at a clear disadvantage with foreign competitors. The industry claims the reduction and elimination of import tariffs on vegetable oils unilaterally rewards countries with which Mexico has not signed free trade agreements. Additionally, the industry generally believes that they receive nothing in exchange and are even rewarding those countries which allegedly subsidize their oil exports. According to industry sources, the SE stated that as of March 2014, taxes on edible oil imports will be eliminated completely.
As a result, several crushers and vegetable oil manufactures implemented a series of measures such as a media campaign against SE’s decision to eliminate the edible oil import duties, filed a court injunction against the measure, and lobbied the new administration to reestablish the previous import duties on vegetable oils.
Private analyst stated that this measure could even displace vegetable oil imports from the United States, which accounted for approximately 73 percent of total imports in MY2012/13. U.S. vegetable oil products enjoy a zero import tariff per NAFTA. However, the additional lowering of tariffs could work against U.S. interests by potentially increasing competition for imports of vegetable oil products from other countries to Mexico.
Soybean Oil Trade
The Post/New 2013/14 soybean oil import forecast is expected to remain unchanged from the MY2012/13 estimate, reflecting an increase in domestic crushing.
Rapeseed Oil Trade
For MY2013/14 the Post/New rapeseed oil import is forecast to increase approximately 3.1 percent assuming competitive international prices and increased demand for this edible oil.
Sunflower Seed Oil Trade
The Post/New sunflower seed oil import estimates for MY2011/12 have been revised downward and remains unchanged for MY 2012/13, based on updated trade information from the GTA. The Post/New sunflower seed oil export estimate for MY2012/13 has been revised upward based on preliminary GTA information and industry sources. The Post/New MY2013/14 import and export estimates are forecast to remain unchanged from revised estimates for MY2012/13.
The Secretariat of Economy (SE) published a decree in the Diario Oficial (Mexico’s Federal Register) on September 5, 2012, that modifies applied duties under the General Import and Export Tariff Law to specific harmonized tariff codes (HTS). The justification for these modifications is that Mexico’s domestic production of oilseeds has not shown sufficient growth as was anticipated to meet its domestic demand. The Government of Mexico (GOM) notes that as a consequence of the country’s deficiencies in oilseed production, they must depend more on imports of seeds and oil whose import tariffs foster higher domestic prices. As a result, the decree states that it is urgent and essential to continue import tariff policies that will generate favorable conditions for Mexican companies and strengthen their competitiveness in response to market trends and to preserve manufacturing productivity and employment.
On June 25, 2009, SAGARPA announced the Pro Oilseeds subsidy program (See 2010 GAIN Report MX0022 Mexican Oilseeds Production Expected to Increase). The program established various oilseed production targets and assists oilseed growers with technical assistance. 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, Pro-Oilseeds 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 National Institute for Forestry, Agriculture and Livestock (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 US$118 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 U.S. $ 60,000). According to official and private sources, the Pro Oilseeds Program operated from 2009 to 2012 helping to increase area and production of oilseeds throughout Mexico.
Moreover, the current SAGARPA administration recently agreed to renew the program for the period 2013-2018.
On February 12, 2013, SAGARPA published in the Diario Oficial (Mexico’s Federal Register) a notice which modifies the operational rules of PROCAMPO - a domestic agricultural support program for 2013 (see 2013 GAIN Report MX3012 “PROCAMPO 2013 Subsidy Program Changes”). The PROCAMPO budget allocation for 2013 is 14 billion pesos (approximately US$1.12 billion), which is very similar to the amount allocated in 2012.
The Diario Oficial notice informs of a change in the program’s title from, “PROCAMPO for Better Living” to “PROCAMPO Productive”, which highlights a new provision that growers are only eligible to receive PROCAMPO’s support for planted area. Before, growers could get support payments just for land ownership – not on actual production. Failure to meet this new planting requirement will lead to removal from land registration in the PROCAMPO directory. Consequently, the grower shall not be eligible to receive the subsidy in the future if no planting takes place. Moreover, SAGARPA stated that under the new program the maximum area under production that a grower can receive a PROCAMPO subsidy will be the equivalent (in hectares) up to 100,000 pesos (roughly US$8,000) per grower and per crop cycle. Under PROCAMPO, a flat rate payment for oilseeds and grains (such as corn, sorghum, wheat, rice, and dry beans) will be provided to farmers for the 2012/2013 fall/winter and 2013 spring/summer crop cycles.
Also, on February 12, 2013, SAGARPA published a notice in the Diario Oficial about the 2013 operational rules of “Forward Contract Program”, Agricultura por Contrato, (see 2008 GAIN Report MX8075 Mexico Announces Support Program for Sinaloa White Corn).
The Forward Contract Program is designed for producers, traders and consumers of soybean, safflower, as well as corn, wheat, sorghum, cotton, coffee, orange juice and livestock products (beef and pork), and recently added cocoa and coverage for agricultural inputs such as fertilizers, natural gas (and derivatives), and diesel. 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 grain and oilseed growers and the processing industry. Moreover, the program mechanism is based on world prices, thereby diminishing the risk of the system being defined as price distorting