Mexican buyers imported ten times more corn from Brazil last year amid concern that NAFTA renegotiations could disrupt their U.S. supplies, according to government data and top grains merchants.
Mexico is on track to buy more Brazilian corn in 2018, which would hurt a U.S. agricultural sector already struggling with low grains prices and the rising competitive threat from South America.
U.S. farmers, food processors and grain traders have spent months trying to prevent trade relationships from falling apart if the North American Free Trade Agreement implodes. They are trying to protect more than $19 billion in sales to Mexican buyers of everything from corn and soybeans to dairy and poultry.
Despite their efforts, South American corn shipments to Mexico are surging. Mexican buyers imported a total of more than 583,000 metric tonnes of Brazilian corn last year – a 970 percent jump over 2016, according to data from Mexico’s Agrifood and Fishery Information Service (SIAP). The purchases all came in the last four months of last year.
Mexico has long been the top importer of U.S. corn, and is the second largest buyer of U.S. soybeans. But Mexican buyers are shifting to Brazilian corn to reduce their decades-old reliance on U.S. supplies for mills, and for animal feed for pigs and cows.
Cheaper prices for Brazilian corn drove some of the sales. But in other cases, Mexican buyers bought Brazilian corn even when it cost more than U.S. supplies, executives and traders told Reuters.