Wheat imports to Mexico will add 4.9 million tons in the 2021/2022 cycle (July to June), which would represent an increase of 2.1% year-on-year, according to projections from the Department of Agriculture (USDA).
This increase represents an economic recovery after the severe fall of the Mexican economy due to the Covid-19 pandemic that resulted in lower purchasing power and lower demand for wheat products in the 2020/2021 campaign.
According to INEGI, Mexico’s GDP in 2020 contracted to the lowest level since the Great Depression.
Due to the severe economic effects of the pandemic and the lack of government financial support for individuals or businesses, the economy contracted 8.5 percent.
However, economists note that minor contractions were also observed in the quarters prior to Covid-19, mainly due to austerity measures implemented by the administration of President Andrés Manuel López Obrador.
Agriculture was the only sector that registered a growth of 2%, mainly due to its designation as an essential service during the pandemic and the record level of exports of high-value fruits and vegetables to the United States.
According to the World Bank, Mexico’s economy will recover from its decline in 2020 with a forecast growth rate of 3.7% in 2021.
Wheat imports
The USDA expects this growth to come from a continued increase in Mexican exports to the United States and greater certainty of the application of the Agreement between Mexico, the United States and Canada (T-MEC).
Despite Mexico’s efforts to diversify its wheat imports, the United States remains the largest supplier of this grain to Mexico with approximately 76% of the total volume imported.
Other wheat imports to Mexico originated from Canada (15%), the Black Sea regions (6%) and France (3%).
Private analysts expect that trend in wheat imports to continue in the 2021/2022 cycle.
In addition to price considerations, which are critical to mill purchasing decisions, other influencing factors include the protein content of wheat and the consistency of shipments.
According to the USDA, millers point out that different sections of a single shipment of US wheat can have very different protein levels.
On the other hand, protein levels in shipments from many other sources are more uniform.
Weather conditions
Mexico’s total wheat production for the 2021/2022 marketing years is forecast at 3.25 million metric tons, with an estimated 585,000 hectares of harvested area, approximately 8% more than the revised estimate for the year. previous.
Favorable weather conditions in the key fall/winter 2020/2021 wheat production areas of northwestern Mexico (Sonora and Baja California) are the main reason for the increase.
The industry and official sources affirm that favorable weather conditions, such as cool temperatures at night, positively benefited the planted area and the yields in the main state of Sonora.
For example, cooler temperatures in late December 2020 in the Navojoa region of southern Sonora benefited wheat fields.
A cooler climate is important during the stage when wheat stalks, or tillers, develop, as the plant requires lower temperatures in its growth stage for optimal development.
