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February 22, 2017

Mexico to Import more Corn and Soy from Brazil and Argentina

With the possibility of the United States pulling out of international trade agreements such as the Trans Pacific Partnership (TPP) and the North American Free Trade Agreement (NAFTA), farmers in Brazil and Argentina feel this could open the door for more corn and soybeans exports to countries such as Mexico, which normally import nearly all their grain from the United States.

The new U.S. administration has threatened to impose tariffs on goods imported from Mexico and in response, Mexico is turning its attention to South America as a potential new source of its grain imports.

There are press reports in Argentina that the Mexican Secretary of Agriculture will travel to Brazil and Argentina next week and he will be accompanied by major grain importers who are going to the two countries in order to close deals on importing more corn and soybeans from Brazil and Argentina.

The state of Mato Grosso is the largest corn producing state in Brazil and the Mato Grosso Institute of Agricultural Economics (Imea) has already published a report extolling the benefits for farmers in the state of increased corn exports to Mexico. Brazil exported only 54,000 tons of corn to Mexico in 2016, but that is poised to increase significantly in 2017. Mato Grosso accounted for 77% of Brazil's corn exports during January of 2017, so any increase in Brazilian corn exports to Mexico would greatly benefit the farmers in Mato Grosso.

The USDA is estimating the 2016/17 Brazilian corn crop at 86.5 million tons, so there should be ample supplies of corn to meet any additional Mexican imports.

In Argentina, farmers greatly increased their corn acreage in 2016/17 in response to the elimination of export taxes on corn. If Argentina started to export more corn to Mexico that would give even more incentive to Argentine farmers to ramp up their corn production. Argentina exported only 97,000 tons of corn to Mexico in 2016, but that is bound to increase in 2017.