Drought hits Mexico's corn outlook, boosting 2020 imports: GCMA

Drought conditions in one of Mexico’s key corn-producing regions will slash domestic production and trigger higher corn imports in 2020, an agriculture consultancy has forecast.

Total corn imports are predicted to rise to 18.3 million mt next year, up 14% on the 16 million mt expected in 2019, according to Mexico’s Grupo Consultor de Mercados Agricolas (GCMA), with the state of Sinaloa key in forming the outlook.

The figure would be the biggest imports in the country’s history, according to Abel Rodriguez Montejo, an analyst with GCMA.

“We are expecting a record of grain imports next year, mainly in the corn segment,” he said, adding that drought conditions have cut the expected corn area by 100,000 ha versus the previous cycle.

“In view of a smaller planting area in Sinaloa, which is Mexico’s main corn producer, due to lower water availability, national production is expected to be cut by up to 1.6 million mt compared to the previous crop,” the analyst said.

According to data from GCMA, corn production in Mexico during 2020 is forecast to reach 26 million mt.

He also said that apart from lower production, corn imports would be higher next year due to more domestic demand for livestock feeding.

Earlier this year, the Mexican government announced a programme to boost domestic production of corn and wheat with the aim of reducing the country’s import needs.

The initiative provides small producers with a guaranteed price of 5,600 Mexican pesos ($286) per mt of corn, while wheat producers receive 5,790 Mexican pesos, with the country’s President Lopez Obrador expecting to cut its dependency of corn imports by 80% within six years.

However, according to Rodriguez Montejo, the programme will not be enough to meet the government’s goals.

“Much of the investment destined for the agricultural sector is through direct transfers to producers that do not generate productivity, so that investment to increase productivity is insufficient,” the analyst previously said.

Mexico is one of the world’s biggest importers of corn with the vast majority of the country’s imports typically sourced from the US, although Brazil has started to make significant in-roads into the supply.