Farm Progress

Look Beyond China | There is Growing Demand in Mexico – the No. 2 U.S. Soybean Export Market

Edith Munro 1

September 1, 2011

3 Min Read

 

Look south to Mexico if you want to see the No. 2 export market for U.S. soybeans. Yet it doesn’t get much press here. From zero in the early 1980s, Mexican soybean purchases have grown solidly, passing 152 million bushels (mbu) by 2002-2003.

“Mexico is extremely important to U.S. producers because it’s next door,” says Roy Bardole, the Iowa grower who chairs the U.S. Soybean Export Council (USSEC). “We have a freight advantage, and many times that’s the difference between what we have to offer and what our competitors have. It’s a market that should always be ours unless we mess it up.”

Now, with economic growth projected to average 3.9%/year through 2015, Mexico’s livestock sector is also expected to grow as the nation’s 107 million people enrich their diets with meat – and that means more demand for soybeans and meal.

Mexican soybean imports over the coming decade should grow by 20+%, according to USDA’s Economic Research Service. It forecasts strong growth in imports of protein feed and vegetable oils, including soybean meal and oil.

The positive outlook comes despite an apparent decline in soybean purchases since 2002-2003.

“Mexico is down about 15% on bean imports from its high-water mark,” explains Keith Menzie, who leads USDA’s World Agricultural Outlook Board oilseed supply and demand committee.

“Some of that’s been replaced by meal imports. You do see about a 20% increase in meal going to Mexico compared to five years ago.”

When bean numbers are adjusted to reflect their meal content, and both categories (adjusted soybean imports and soybean meal imports) are graphed together, the trend continues to climb (see chart).

“What we’re losing on beans, we’re gaining back on meal,” says Menzie, “And the U.S. usually accounts for all its bean imports and most of its meal.”

In Mexico, Francisco de la Torre, director of USSEC market-development programs, also expects growing demand. He notes that Mexico is a market for all soy products, from beans and meal to soy proteins and complete soyfoods for human nutrition.

“We’ve had some stagnant years (in livestock production) but we’re starting to see growth again this year, especially in broilers and eggs,” de la Torre says, noting that Mexico has the world’s highest level of per-capita egg consumption.

USSEC projects average annual growth in Mexican soybean imports of 2-2.5% annually to reach a new high of 4.5 mmt (165.3 mbu) in 10 years. De la Torre believes government programs to encourage domestic soybean production will have only a limited effect. “Only 126,000 metric tons (of soybeans) are produced in Mexico. The government objective is to decrease our dependence on imports from 95% to 70% of our supply, but the crushers and buyers don’t expect our production to go beyond 300,000 metric tons (11 mbu) per year.”

He also notes that the use of other feed ingredients, especially distillers’ dried grains with solubles (DDGS), is growing rapidly in Mexico and that DDGS compete with soybean meal in some rations.

“We see some DDGS going into swine, poultry and dairy, but soybean meal is still the primary source of protein in these diets. DDGS is less an issue in poultry, but it definitely competes in beef and dairy rations,” he notes.

A more serious challenge may come from the free-trade agreement Mexico is currently negotiating with Brazil. That won’t affect the U.S. competitive position for the next year or two, according to de la Torre, but it could become an issue within three to five years.

Bardole also cites the challenges from competitors like Brazil: “There are others who would be glad to have markets like Mexico. That’s why it’s just as important for us to service our friends in Mexico and Canada as it is for us to service a China or a Vietnam.

“Because of proximity, Mexico is a market that should be ours, but you have to take care of your customer. If we mess it up, that’s our fault,” says Bardole.

About the Author(s)

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like