Executive Briefings

Exports to Mexico Fall as Uncertainty Over Nafta Lingers

Friction between the U.S. and Mexico over trade is starting to cut into sales for U.S. farmers and agricultural companies, adding uncertainty for an industry struggling with low commodity prices and excess supply.

Over the first four months of 2017, Mexican imports of U.S. soybean meal - used to feed poultry and livestock - dropped 15 percent, the first decrease for the period in four years, according to data from the U.S. Department of Agriculture. Shipments of U.S. chicken meat fell 11 percent, the biggest decline for the period since 2003. U.S. corn exports to Mexico declined 6 percent. Mexico is the largest U.S. export market for those commodities.

The numbers reflect how Mexican companies are now increasingly buying grain on a short-term basis and purchasing more chicken from Brazil, troubling some industry officials and analysts. The trade data, which is the latest available, indicates that Mexico is starting to follow through on aspirations to buy food from a wider range of countries, and reduce reliance on the U.S.

“We have to send a signal to policy makers in Washington, and emphasize that we are not sitting still,” said Raúl Urteaga Trani, head of international affairs for Mexico’s Secretariat of Agriculture, who last month shepherded officials from 17 Mexican companies on a trade mission to South America, focused on corn, soybeans and wheat.

Mexico ranks as the third-largest customer for U.S.-produced farm goods overall, accounting for $18bn in trade last year, and the U.S. is Mexico’s biggest market for food, making for a close-knit trade relationship that has built up around the 1994 North American Free Trade Agreement. That agreement is expected to be renegotiated in August by the Trump administration. Beginning on the campaign trail, President Donald Trump claimed Mexico had siphoned jobs, investment and wealth from the U.S. through the deal.

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Over the first four months of 2017, Mexican imports of U.S. soybean meal - used to feed poultry and livestock - dropped 15 percent, the first decrease for the period in four years, according to data from the U.S. Department of Agriculture. Shipments of U.S. chicken meat fell 11 percent, the biggest decline for the period since 2003. U.S. corn exports to Mexico declined 6 percent. Mexico is the largest U.S. export market for those commodities.

The numbers reflect how Mexican companies are now increasingly buying grain on a short-term basis and purchasing more chicken from Brazil, troubling some industry officials and analysts. The trade data, which is the latest available, indicates that Mexico is starting to follow through on aspirations to buy food from a wider range of countries, and reduce reliance on the U.S.

“We have to send a signal to policy makers in Washington, and emphasize that we are not sitting still,” said Raúl Urteaga Trani, head of international affairs for Mexico’s Secretariat of Agriculture, who last month shepherded officials from 17 Mexican companies on a trade mission to South America, focused on corn, soybeans and wheat.

Mexico ranks as the third-largest customer for U.S.-produced farm goods overall, accounting for $18bn in trade last year, and the U.S. is Mexico’s biggest market for food, making for a close-knit trade relationship that has built up around the 1994 North American Free Trade Agreement. That agreement is expected to be renegotiated in August by the Trump administration. Beginning on the campaign trail, President Donald Trump claimed Mexico had siphoned jobs, investment and wealth from the U.S. through the deal.

Read Full Article