Corn farmers in the United States worry as the attempts of Mexico to diversify its supplies of corn could hurt the market.
In the year ending August 31 2016, shipments of corn totaled at around 13.603 million tons making Mexico the largest importer of U.S. corn. According to the U.S. Department of Agriculture, the sales account for about 28 percent of total U.S. corn exports.
Mexico tents do buy grain from South America or some other country other than the United States only when it is cheaper or supplies are tight.
Trade sources said that U.S. corn prices of around $190 per ton are about $10 to $15 lower than South American grain delivered to Mexico.
Chief executive of grain trader Bunge Ltd. said on a call with analysts on Wednesday: “The extent to which there is any switching that takes place (by Mexico) to South America frankly all depends on price. At the moment it doesn't work so there would have to be something else that triggers it.”
Farmers in the United States worry about how the new administration’s early moves on trade might threaten exports, which are a rare bright spot in an agricultural economy where farm income could fall to its lowest since 2002 in inflation-adjusted terms.
President Donald Trump has already withdrawn the U.S. from the Trans-Pacific Partnership deal. He raised the thought of re-negotiating the North American Free Trade Agreement with Canada and Mexico which has quadrupled U.S. agricultural exports in the region during the past two decades according to food producers.