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Mexico October Oilseeds Update
The 2008/09 soybean import estimate has been revised downward to 3.6 million tonnes reflecting decreased demand from the feed industry, according to the USDA Foreign Agricultural Service. Similarly, the total soybean consumption estimate for 2008/09 has been reduced to 3.685 million tonnes due to the anticipated poor macroeconomic performance in 2009. The soybean oil production estimate for 2008/09 has been revised downward to 640,000 tonnes, as a result of lower imports of US soybeans and reduced crushing.
Soybeans
The 2008/09 planted and harvested areas have been revised upward and downward, respectively, reflecting updated information from the Ministry of Agriculture (SAGARPA).
The production estimate for this marketing year remains unchanged at 100,000 tonnes.
However, the production level continues to represent less than three per cent of total domestic consumption.
The 2008/09 soybean import estimate has been revised downward to 3.6 million tonnes reflecting the expected contraction in domestic demand for livestock products.
As a result of the slowdown in the Mexican economy and the international financial crisis, Mexican imports of US soybeans will likely be adversely affected by decreased demand from the feed industry.
Similarly, the total soybean consumption estimate for 2008/09 has been reduced to 3.685 million tonnes.
This reduction is due to the forecast poor macroeconomic performance in 2009. The Government of Mexico (GOM) was forced to revise its 2009 budget proposal in October because of the global credit crisis as well as decreased forecasts for economic growth. The GOM cut its 2009 economic growth forecast from three per cent to 1.8 per cent.
The soybean meal production estimate for 2008/09 has been revised downward based on updated information from the private sector.
These sources indicate that as result of lower soybean imports, meal production should decrease in 2008/09. The soybean meal import estimate for 2008/09 has been revised downward approximately four per cent from our previous estimate, reflecting reduced demand from the feed industry.
The market for finished livestock products is beginning to be contracted and the cost of production continues to increase.
As a result, industry contacts report that domestic demand for soybeans and soybean meal should decrease in 2008/09. Another factor for an expected decline in the growth of US soybean and soybean meal exports to Mexico is the weakening of the Mexican peso relative to the US dollar, which will create relatively more expensive exports of these products.
Mexico's peso has been plummeting since 7 October and the Central Bank (Banxico) has taped nearly 15 per cent of its reserves to rescue the peso. Banxico has sold nearly $13 billion worth of US dollars since that date and purchased pesos in an effort to rescue the vale of the peso.
The estimated 2008/09 ending stocks for soybean meal were revised downward due to lower-than-previously estimated production and imports.
The oil production estimate for 2008/09 has been revised downward to 640,000 tonnes, as a result of expected lower imports of US soybeans and reduced crushing. Similarly, the production estimate for 2007/08 has been revised upward reflecting SAGARPA's official information.
Oil crushing sources have indicated that crushing margins could be reduced next year due to the unfavorable outlook of the Mexican economy and it could be more profitable to import crude oil rather than beans.
Therefore, the oil import estimates for 2008/09 have been revised upward.
The consumption estimate for 2007/08 has been adjusted upward to 870,000 tonnes based on official information from SAGARPA.
The estimated 2008/09 soy oil ending stocks were revised downward due to lower-than previously estimated production.
However, the ending stock figure for 2007/08 has been revised upward, reflecting higher-than-previously production.
Rapeseed
Based on available information from SAGARPA and the Secretariat of Economy (SE), FAS/Mexico forecasts no changes to the PS&D update from September for rapeseed and rapeseed meal. It should also be noted that the rapeseed meal import estimate for 2007/08 remains unchanged. There is a difference between preliminary official Mexican data issued by the SE and US Census data.
Sunflower
The 2007/08 import estimate for sunflower oil has been adjusted upward to 38,000 tonnes, which is based on official data from the SE for the first 10 months of this marketing year.
Also, the export oil estimate for 2007/08 has been revised upward reflecting the most recent SE data. The import and export estimates for sunflower oil for 2008/09 have been revised upward, assuming the same levels of the previous year and based on information from industry sources.
For sunflower and sunflower meal, FAS/Mexico forecasts no changes to the PS&D update from our September report, which is based on available information from SAGARPA, the SE, and the National Association of Oils, Fats and Shortening (ANIAME).
Further Reading
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November 2008
