Mexico Agribusiness Q1 2021

Mexico Agribusiness Q1 2021

Key View:

Mexico's agribusiness sector continues to face plenty of challenges across the five markets we track as a result of thesharp contraction in the country's economy in 2020 and the fallout from the Covid-19 pandemic on business activity and consumerdemand. With the impact of those headwinds becoming clearer, we have made a range of revisions to our production andconsumption forecasts this quarter, with those changes tilted to the downside to reflect the ongoing impact of the coronavirus andthe continued risks its presents the sector with. While the majority of our forecasts remain in positive territory, thataccelerated growth is more moderate in some markets than seen previously. In the near term, however, 2021 represents a year ofrebound for the industry after a series of sharp contractions seen in 2020. Meanwhile over the medium-to-long term, we continueto believe that most agribusiness sub-sectors will benefit from the government's positive focus on promoting self-sufficiency inbeef, chicken and pork, among other agricultural products, and its further support of the coffee industry - a time line for which willhave been delayed by the impact of the pandemic. Meanwhile, the full implementation of the USMCA in July 2020, will, in our view,compound the endogenous factors supporting Mexico as a beneficiary of automotive supply chain diversification and provideupside potential to the agribusiness market.