On Friday morning, I read the newsletter, Market Perspectives, published every week by the U.S. Grains Council (USGC) and to my surprise, one of the pieces of analysis ends with this sentence: “There is continued movement of Handymax corn vessels from Brazil to Veracruz, Mexico.”
I say is surprising because last night in Mexico they went to bed with the news that within ten days, the United States will begin 5 percent tariffs on all Mexican products, reaching 25 percent in a little more than two months, U.S. President Donald Trump said.
I also just read in El País that in “January and February [2019] Mexico became the main trading partner of U.S., surpassing China.” This goes hand-in-hand when at the same time the U.S. “is trying to accelerate approval in the Congress of the new trade agreement with Mexico and Canada.” But, of course, it is contradictory with Trump's statements.
Many would think that Mexico should retaliate. Frankly, I do not know which is better. But, in the end, there is no better retaliation than to start buying grain from other sources. Two years ago, I reported that there were Mexican poultry producers in Brazil who were looking to buy corn. Maybe now the amounts are not scary, but it is already happening (Mexico is also buying Brazilian chicken and has just increased the quotas).
Mexico is the largest importer of corn from the United States. Mexico will continue purchasing corn abroad for feed manufacturing. Its animal agriculture activity is thriving. In 2018 only, the poultry industry grew more than three percent. Similar growth is expected this year.
I do not really know what the direction of this whole situation will be. It is a pity that so much work done by the American farmers and their associations is lost, as well as the ease of picking up the phone, placing a corn order, and having it by rail within two or three days at the feed mill’s door.
One thing is true: things change. Meanwhile, more and more ships with corn from Brazil will continue to enter Veracruz.
What do you think?
