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"Mexico Agribusiness Report Q2 2011" is now available at Fast Market Research

New Food and Beverage research report from Business Monitor International is now available from Fast Market Research

 
PRLog - Apr. 14, 2011 - BMI View: With Mexico's GDP currently forecast to increase by 4.1% in 2011, agricultural producers are also gearing up for an improved year as demand returns in many sectors. With demand for meat, poultry and dairy products set to grow as incomes rise, consumption of feed grains is also forecast to increase. Concerns have, however, been growing about price inflation as the costs of food, fuel and electricity prices have increased. In Q111, the sharp spike in corn futures on the global market led to fears of a new 'tortilla crisis' in Mexico. In an attempt to keep corn prices in check, the Mexican government hedged against corn price inflation, buying futures contracts to fix the price of corn on behalf of tortilla makers and other domestic processors.

Key Forecasts

* Sugar output is forecast to recover strongly in 2010/11. We have pencilled in production of 5.46mn tonnes, an increase of 6.6% year-on-year (y-o-y). The increase is due to good weather conditions and increased rainfall in the country's sugar growing areas, along with lower fertiliser prices. Mexican sugar exports are also forecast to bounce back in 2010/11, after the country recorded a negative trade balance in 2008/09. Exports are likely to rebound to close to the 1mn mark - currently forecast at 938,000 tonnes - giving Mexico a trade surplus of 713,000 tonnes.
 * Unexpected frosts in the northwestern state of Sinaloa in February 2011 have hit the Mexican corn crop, with the agriculture ministry warning of losses of a projected 1.8mn tonnes. Despite this setback, BMI still forecasts corn output to reach 23.98mn tonnes in 2010/11, a y-o-y rise of 17.7%.
 * We forecast coffee production to increase to 4.51mn bags in 2010/11, as more favourable weather conditions have encouraged the development of young trees. Demand is also forecast to return to growth as consumer disposable incomes rise. After dropping by an estimated 7.3% y-oy in 2010 in response to high prices, we are currently forecasting a y-o-y increase of 3.4% y-o-y in 2010/11 to 1.87mn bags. Out to 2015, we see consumption increasing by 25.0% from the low 2010 level to 2.26mn bags.
 * Rice production is now forecast to decline by 14.9% y-o-y in 2010/11 to 151,000 tonnes. Output has been dented by a reduction in the area harvested and by flood-damage in the main riceproducing states. We see a small reversal of this trend over our forecast period owing to increased world prices for rice, which we anticipate will encourage producers in southeastern states to begin to devote more acreage to the crop. To 2014/15, we forecast production to grow 13.1% from the 2009/10 level to reach 201,300 tonnes.
 * Out to 2015, butter production is forecast to grow by 27.2% on the 2010 level to reach 218,100 tonnes. The majority of this rise will come from the food processing industry with more butter being used in the production of confectionery and baked goods, the sale of which will be helped by the spread of modern retail into rural areas and by rising wages.


Key Trends And Developments

From January 31-February 7 2011, representatives from Mexico and Central America met in Guatemala for the fourth round of negotiations for a regional free trade agreement (FTA). Discussions centred around questions of access to markets, rules of origin, customs procedures, trade easing, resolution of controversies, technical obstacles for trade, sanitary and phytosanitary measures, commercial defense, services and investment, public contracting, intellectual property and institutional aspects. The next round of negotiations will take place in Mexico City in May 2011.

Mexican imports of many US cheeses plunged by two thirds from August to November 2010 due to the effects of retaliatory tariffs imposed in response to a long-running dispute over long-haul, cross-border Mexican trucking. However, in January 2011, there were signs that the two countries were moving towards a resolution, as the US Department of Transportation announced the introduction of an 'initial concept document' intended to allow for a trucking programme that prioritises safety, while complying with the US trade obligations to Mexico stipulated under the North American Free Trade Agreement.

On February 8 2011, the Mexican Secretaria de Economia announced that it will conduct an investigation into US poultry producers over anti-dumping violations. The investigation comes in response to complaints filed by three Mexican poultry companies - Bachoco, Buenaventura Grupo Pecuario and Productores Avicolas de Tehuaca - that US poultry products, specifically chicken legs, were being sold on the Mexican market at unfair prices.

In December 2010, the National Union of Corn Mills and Tortillerias (UNIMTAC) threatened to increase the price of tortillas by 50% to a minimum of MXN12 (US$0.96) per kilo in response to rising corn prices and increasing operating costs. The threat of price rises has since receded, however, following negotiations between the Secretary of the Economy Bruno Ferrari and Lorenzo Mejia, president of UNIMTAC. Following the discussions, Ferrari announced changes to the Rules of Operation of the ProMasa programme, facilitating access for many UNIMTAC members.

The threat of a new 'tortilla crisis' has also been averted by the government's decision to raise spending on a grain hedging programme, which will provide financial support of about MXN8.5bn (US$700mn) in subsidies to farmers, the food industry and grain traders to hedge risk through purchase futures options on the Chicago board of trade.


For more information or to purchase this report, go to:
-  http://www.fastmr.com/prod/130681_mexico_agribusiness_rep...

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets.  BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports.  Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports.  View more research from Business Monitor International at http://www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

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Industry:Food, Restaurants, Research
Tags:sugar, mexican, coffee, crop, corn, rice, pork, hurricane, nestl, agricultural
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