Agri Commodities Preview: USDA Estimates 2.7 percent Rise In Soyaban Production In Mexico During MY 2018/19

Total Mexican oilseeds production and harvested area estimates in marketing year (MY) 2017/18 were revised downward, reflecting preliminary final data from SAGARPA. SAGARPA continues to publish official data for sunflower seed and rapeseed (canola) and peanuts just once a year. However, overall oilseed production in Mexico is expected to increase to 599,000 MT in MY 2018/19, due largely to higher soybean production. Despite the expected increase in soybean production and the slight increase in sunflower production, it will not achieve the level reached two years ago in MY 2016/17, which has a revised production estimate of 630,000 MT. Industry sources argued that the reduction of the supports granted by the Government of Mexico (GOM) adversely impacted both the planting decisions of oilseeds growers and the production results (for example, due to lower investment in inputs) in MY 2017/18 .For MY 2018/19, soybean harvested area is forecast at 265,000 hectares (ha), a slight increase of 2.7 percent from the revised MY 2017/18 estimate. Production is forecast at 490,000 MT, assuming normal weather conditions and that the GOM continues its oilseed support program (see Policy section). Despite this increase, soybean production is still expected to represent approximately ten percent of all Mexican soybean consumption in MY 2018/19, a similar percentage to the prior year. For MY 2016/17 and MY 2017/18, the soybean production estimates have been revised upward and downward, respectively, based on more complete data from SAGARPA as of February 28, 2018. According to private industry sources, there is limited financing and support from two of the main crushing and vegetable oil manufacturing companies (Ragasa and Proteinas y Oleicos) in Tamaulipas and Yucatan. However, in the rest of the main producing states (i.e. Campeche, San Luis Potosi, and Sonora), it is unlikely for planted area to increase significantly, as local farmers are more familiar with the production practices for traditional alternative crops, such as corn or sorghum. Moreover, soybean production takes place primarily in non-irrigated areas, which are subject to unpredictable weather conditions.