Mexico Agribusiness Report Q2 2016
BMI View: We have made some minor forecast adjustments in our Q2 2016 Mexican agribusiness reportupdate. We retain our positive outlook for various segments of the industry till then end of our forecastperiod in 2020. Growth rates will begin to weaken compared to previous years but we foresee positivetrends in domestic production and consumption of the dairy sector, livestock sector and coffee segment. Wehold a subdued forecast for the grains market due to corn production volatility. Rising per capitadisposable incomes will continue to deliver demand-side growth, but we hold our opinion thatcompetitiveness remains an issue for the Mexican agricultural sector as a whole, particularly in the grains,livestock and sugar subsectors.
We estimate that Mexican corn production will decline by 7.8% in 2015/16 to reach 23.5mn tonnes.Nevertheless, we estimate that the crop yields will recover over the course of our forecast period. Cornconsumption, already high in Mexico, will continue to witness modest growth rates of under 1% to 2020.
We forecast strong production growth in all three livestock sectors in Mexico, with pork productionoutpacing poultry and beef and veal. Consumption growth will be stable in poultry and pork whereashigher cost will dampen beef and veal growth prospects in 2016.
The Mexican dairy sector will expand in terms of production in 2016 with domestic cheese demand andsupply outpacing growth in liquid milk and butter sectors.
Rising per capital incomes and discretionary spending powers will boost food consumption in 2016 andbeyond, over the course of our forecast period.
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