MEXICO- According to a report by the USDA, Mexican wheat and rice production forecast is slightly lower in marketing year (MY) 2023/24 due to uncertain government support delaying planting decisions.
The report also indicates that reduced government support for commercial growers, and less incentive to invest in new production technologies amid high inputs costs could slightly reduce the country’s overall grain production.
Wheat production could decline five percent to 3.4 MMT as the total wheat consumption is expected to reach 7.7 MMT in MY 2023/24, a slight increase compared to the previous marketing year.
Moreover, wheat production could reduce even further as some wheat farmers may choose to plant corn, which is more water-intensive but may provide more profitability than wheat.
Additionally, farmers could be reorienting their planting intentions to crops such as barley and agave. Both crops are less water-intensive and will supply Mexico’s export market industries for beer and tequila, respectively.
Wheat exports could decline by 2 percent due to lower domestic production, significantly caused by reduced government support.
On the other hand, MY 2023/24 imports could increase slightly to 5.1 MMT to meet increased milling demand.
Mexico’s wheat milling capacity was 10.6 MMT in 2022, comprised of 93 wheat mills. The wheat flour sector currently utilizes about 71 percent of the available capacity, with 7.5 MMT of wheat transformed into 5.6 MMT of wheat flour and semolina in 2022.
The United States is Mexico’s leading wheat supplier, which Mexico considers a high quality and competitively priced, followed by Canada.
Meanwhile, Mexico’s milled rice production for MY 2023/24 (October-September) could decrease by 3% to 165,000 MT as less acreage goes to the crop, with some of the planted going to sugar cane and corn.
High production costs caused by high prices of inputs like fertilizers and other agrochemicals and lower priced zero tariff rice under anti-inflation programs have affected domestic rice prices.
Corn production to remain steady in light of Corn Decree
The forecast for corn production could remain in line with the previous year’s 27.4 MMT, with a slight increase to the forecasted harvest area of 7.25 million hectares.
This increase in corn acreage is inspired by a February 2023 Corn Decree that restricts the use of GE corn in the tortilla industry and could affect Mexico’s corn market.
However, the potential for increased corn planted area remains limited due to corn’s water, input, and land requirements.
The USDA notes that despite a steady growth pattern from 2011-2019, yields have remained flat in the last three years, mostly due to the increasing cost of production.
Corn imports are forecast at 17.9 MMT in MY 2023/24, a three percent increase over the previous year, driven by increased demand from the livestock and starch sectors.
However, the restriction on GE corn use in the tortilla industry through a February 2023 Decree could impact these imports. This is especially because 95 % of Mexico’s corn imports come from the USA, which has been imposing GM corn in Mexico’s food industry.
On the contrary, the country’s livestock feed industry has been expanding which could cause an increase in Mexico’s corn imports.
It is estimated that in MY 2023/24, Mexico will require approximately 27.2 MMT of corn to support the feed industry, most of which goes to poultry feed production.
Human consumption could remain steady in MY 2023/24 amid an 18% price increase for tortillas, Mexico’s “daily bread”.
The forecast for sorghum production could remain in line with corn production, remaining relatively the same as the previous year at 4.8 MMT.
Consumption is forecast marginally higher than the previous year at 5.2 MMT, based on expected growth in the animal feed industry.
Japan continues to move from rice to wheat
Meanwhile, the USDA predicts that Japan will continue planting more wheat and less rice in the 2023-24 marketing year, a trend that has been going on for a decade.
The wheat harvested area could increase by 3.5%, production rising 10% to 1.17 MMT, while rice acreage declines by 1.1% to 1.48 hectares.