Mexico Agribusiness Report Q1 2013Published by: Business Monitor International Published: Dec. 19, 2012 - 100 Pages Table of Contents
AbstractBMI View: The Mexico agriculture sector is unique within emerging markets in that it barely benefitsfrom thriving domestic consumption growth. Among the commodities we cover, we forecast consumptiongrowth of less than 15% out to 2017 in all of them, with most items below 10%, despite a large andgrowing population. This is mainly because consumption per capita for several items (notably coffee andsugar) is already high by global standards, leaving less room for growth. Among the outperformingsectors we believe grain and poultry production show potential to improve. However, the country willremain a net importer all four items over the long term. The sugar and coffee sectors are expected toremain the key exporters over the long term, although coffee production will probably suffer in the wakeof lower average coffee prices in 2013 and 2014.Key Forecasts Corn production growth to 2016/17: 45.3% to 26.3mn tonnes. We expect grain production toincrease. Yields are expected to improve as consolidation among farmers allows for increasedinvestment in improved production techniques. Sugar production growth to 2016/17: 27.8% to 6.6mn tonnes. Our outlook for Mexican caneproduction is optimistic. Taking into consideration the climate and the amount of land availablefor production, Mexico has great potential to increase output of sugar cane in order to producesugar for export or ethanol for the development of a national biofuels industry. Coffee consumption growth to 2017: 13.2% to 2.2mn bags. Our outlook for Mexican caneproduction is optimistic. Taking into consideration the climate and the amount of land availablefor production, Mexico has great potential to increase output of sugar cane in order to producesugar for export or ethanol for the development of a national biofuels industry. 2013 real GDP growth: 3.4% (down from 4.0% in 2012; predicted to average 3.8% from nowuntil 2017). Consumer price Index: 3.3% year-on-year (y-o-y) in 2013 (down from 3.8% y-o-y in 2011). Key Trends And Developments We maintain our corn production forecast at nearly 22mn tonnes in 2012/13 and now see upside risks toour forecast for 2012/13 as official sources are expecting an improvement in weather and yields. Webelieve this will give some relief to domestic prices in the country and help food inflation to moderate ascorn is a major part of the Mexican food basket. Consumer prices rose by 4.7% in September 2012,compared with 3.1% in September 2011. Strong output will reduce the country's need for imports in thecoming months, especially compared with 2011/12. However, ending stocks will not be sufficient to cover much of the country's needs, and we expectimports to return to their 2010/11 level. We forecast a production deficit of 7.9mn tonnes in 2012/13,compared with 11.4mn tonnes in 2011/12. The US Department of Agriculture (USDA) forecasts importsto reach 8.5mn tonnes (as part of the exports will be used to replenish the country's low stocks) in2012/13, compared with 11.2mn tonnes in 2011/12. We also maintain our view for a strong rebound in Mexican coffee production in 2011/12 because of highprices during plantings and favourable weather conditions. We forecast output to grow by 11.0% y-o-y to4.5mn bags in 2011/12, which is 4.4% higher than the 10-year average. The increase is also a result ofwork to improve plantations, which is likely to support production growth over the long term. We do not see a repeat of this record growth over our forecast period, as the country's coffee sector is stillhampered by ageing plantations, a lack of fertilisers, high production costs and a lack of field labour. In2012/13, we forecast production dropping slightly to 4.4mn bags because of lower prices and lessinvestment in improvement in coffee plantations. Production at that level will still be higher than the 10-year average and will keep the domestic market, as well as global market well supplied. We continue to forecast Mexican sugar production to rebound 6.0% y-o-y to reach 5.5mn tonnes in2012/13. This will largely be a result of base effects, as the country's sugar production fell 5.0% y-o-y in2011/12 on the back of severe droughts. Recent rainfall also is likely to benefit sugar cane yields andsugar content for the 2012/13 season, which starts in October. The USDA forecasts cane planted area of762,000 hectares (ha) in 2012/13, a negligible increase over the 760,000ha in 2011/12. This implies sugarcane yields of 7.2 tonnes/ha in 2012/13, compared with 6.6 tonnes/ha in 2011/12. As the growing seasonis not complete, we will continue to monitor weather developments, cultivation practices and timelymaintenance of sugar mills. We will adjust our forecast accordingly if we see any major change in theoutlook for the crop. Get full details about this report >> |
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