Recently published research from Business Monitor International, "Mexico Agribusiness Report Q3 2013", is now available at Fast Market Research
Boston, MA -- (SBWIRE) -- 07/25/2013 -- We are forecasting production and consumption growth across the entire agricultural complex out to 2017, although growth rates will vary widely. In general, we are very positive regarding the longterm growth story in Mexico, which we believe will be driven in part by a strong consumer story. Indeed, only consumption of whole milk powder (considered an inferior good in the country) is forecast to grow by less than 1% over our forecast period. Despite this, we have relatively subdued production forecasts as the sector suffers broadly from high feed prices, comparatively poor transport, and few export opportunities given the country's proximity to the US, the world's largest grain and livestock exporter. Indeed, over the forecast period, we see the country remaining a net importer of virtually all agricultural commodities except for coffee and sugar. Other constraints, such as reduced land availability (corn) and extensive government influence (sugar) will also contribute to constrain production.
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- Corn production growth to 2016/17: 32.6% to 24.0mn tonnes. We have revised down our production growth estimates for corn, as we believe the area dedicated to corn is unlikely to grow significantly in the coming years and usage of genetically modified seeds remains limited. The strong five-year growth figure is owing to base effects.
- Sugar production growth to 2012/13: 14.7% to 6.0mn tonnes. This will be driven by good rainfall in southeast regions of the country, as the area dedicated to sugar for the 2012/13 season is expected to decline slightly owing to falling prices. Our projection for improved output comes despite work protests over low prices.
- Coffee consumption growth to 2017: 13.2% to 2.2mn bags. Growth in consumption will be helped by campaigns from Mexico's coffee producers to encourage domestic consumption, since low domestic consumption makes the industry highly vulnerable to fluctuations in world demand.
- 2013 real GDP growth: 3.2% (down from 3.6% in 2012; predicted to average 3.0% to 2017).
- Consumer price inflation (average): 3.4% year-on-year (y-o-y) in 2013 (down from 3.6% y-o-y in 2012).
Industry Trends And Developments
We are optimistic regarding the fate of the 2013/14 Mexico corn crop due to the large area planted and the expectation of better yields. The risk to production this season is reports of dry weather in key growing regions. However, we have revised down our long-term production forecasts for Mexican corn as we believe structural concerns and limits on the area dedicated to corn will constrain production. Mexico is already one of the world's largest corn importers, and without greater usage of genetically modified seeds, the country's net production deficit is likely to grow in the coming years.
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