Mexican millers, historically the biggest buyers of US wheat, are lining up a second purchase of Argentine wheat before they have even received the first – and are investigating purchases from Australia, Germany and Poland too.
Talk suggests that Mexico’s millers – which have been already been reported as having bought one 30,000-tonne cargo of Argentine wheat, the first on record – are “in the process of purchasing one additional shipment” from the South American country.
“Depending on the results of this test, more shipments are possible if the price and timing are right.” The first one is scheduled to arrive in late December.
Furthermore, industry “contacts” have revealed that they have also requested access [to Mexico] for wheat from Germany, Poland, and Australia”.
The comments came in a report from the US Department of Agriculture’s bureau in Mexico City, and amid growing worries over the future of US’s large agricultural exports to Mexico, given the renegotiation of the Nafta free trade treaty and cooling relations between the two countries.
The talks have prompted a series of cautions from US agricultural industry groups over the importance of maintaining US farm exports to Mexico, worth an estimated $6.6bn for grains and soy alone.
Mexico was the biggest buyer of US wheat last season, at some 3m tonnes.
Mexican officials, meanwhile, have stressed the importance of diminishing the country’s reliance on US crop supplies and broadening purchases from other countries.
“The Mexican government continues to highlight its efforts to diversify its sources of grains and oilseeds,” the USDA bureau said.
‘Reflects competitive pricing’
However, the bureau also said that financial reasons may be driving Mexico’s shift from the US, with other origins offering cheaper supplies.
“Private sector contacts emphasise that they are making decisions based on economic factors and that an increase in purchases this year merely reflects competitive pricing from South America,” the briefing said.
Indeed, their requests for Mexico to open up to Argentine wheat had been first made three years ago, before the deterioration in relations with the US.
International Grains Council data overnight showed Argentine wheat, at $185 a tonne up river, cheaper than supplies from all other major origins, bar Black Sea feed wheat, costing $178 a tonne, also on a FOB basis.
Australian premium white wheat cost $210-215 a tonne, depending on the poort, while German B quality wheat can be bought in Hamburg at $198 a tonne, again on an FOB basis, the IGC data showed.
By comparison, US hard red winter wheat, with 11.5% protein, was priced at $214 a tonne from Gulf ports, from where transport costs to Mexico are minimal.
‘Does have concerns’
The USDA bureau’s report added that “many contacts have expressed that they assume grain imports from the US will continue with or without Nafta”.
However, the bureau acknowledged that “on the other hand, the private sector does have concerns about the future of the agreement.
“In particular, the [Mexican] livestock industry has indicated that it is actively looking for alternatives should its access to US corn be restricted.”
(Source – https://www.agrimoney.com/news/mexican-millers-seeking-to-add-australia-germany-poland-to-wheat-origins-41661)