Mexico corn yields improving but still best market for US
American farmers are very good at growing corn. Mexican growers are good at it, too, and getting better. Even so, the outlook for at least one component of U.S. corn exports to Mexico remains bright.
That's among the conclusions of a new report from the U.S. Department of Agriculture's Economic Research Service on "The Growing Corn Economies of Mexico and the United States."
Mexico is the top buyer of U.S. corn, accounting for 25% of U.S. corn exports that represent 4% of total annual U.S. corn production. In other words, Mexico imports about 4 bushels of every 100 bushels that American farmers produce annually.
Also from the report:
• The United States is the world's largest corn producer, accounting for 34% of world production, while Mexico ranks eighth, accounting for 3%.
• The U.S. focuses on yellow corn, used primarily for feed and ethanol. Mexico's produces primarily white corn, used for tortillas and other corn-based foods, though it raises a small but growing amount of yellow corn, too.
• About 15% of U.S. corn is exported, and U.S. corn accounts for virtually all of Mexico's corn imports. (Mexico gets a little from Brazil, too.) Mexico exports a very small amount of white corn to the United States.
• Corn yields continue to rise in both the U.S. and Mexico. Yields are rising especially fast in Mexico on irrigated land, primarily due to improved seed varieties. From 2012 to 2017, yields of corn grown for grain on irrigated land in Mexico rose an average of 7.8% annually.
• U.S. average corn yields remain much higher than Mexican average corn yields, however. That's partly because genetically engineered corn is widely grown in the United States, while GE corn can be consumed but not cultivated in Mexico. Bigger farms that promote efficiency — the average U.S. corn farm is about 30 times larger than the average Mexican corn farm — also account for the gap in yields.
The report stresses that the former North American Free Trade Act, or NAFTA, implemented in 1994, encouraged the U.S. and Mexico corn markets to become more integrated. Since 2008, U.S. corn exports to Mexico have been free of tariff and quota restrictions, which the new U.S.-Mexico-Canada Agreement would continue, according to the report.
Mexican demand for feed corn for its growing livestock industry continues to grow — a positive trend for U.S. corn growers, especially if their corn exports to Mexico remain free of tariff and quota restrictions, the report says.
The 2018 Farm Bill essentially continues existing U.S. risk-management and income-support programs, the report says.
In Mexico, however, the new presidential administration is implementing new ag policies that focus on the country's many small and mid-sized producers of corn and other commodities. But it's too soon to predict how those policies might affect the corn market, the report said.
Read the report at https://www.ers.usda.gov/webdocs/publications/93542/ocs-19f-02.pdf?v=9932.1.