As we move toward incoming President Donald Trump’s second term, two questions top a long list for agriculture:
- Will the president’s policies impact corn demand?
- Will there be a trade war?
The underlying concern in both questions is: Will corn demand suffer?
Let’s look at Mexico. Mexico is the largest consumer of U.S. corn, buying over 40% of our annual exports. So far, year-to-date, Mexico has purchased about 20.7% more corn this year through the end of October when compared to a year-ago level.
Over a five-year average of corn purchases, Mexico has increased U.S. corn purchases by 59.2%. Many are suggesting Mexico is “front loading” corn purchases in anticipation of a potential trade war with the U.S.
Mexico has a new president as well and there is a push for Mexico to make its food production and distribution look more like it did in the 1980s, when they consumed more tortillas, beans, instant coffee and hot chocolate.
However, the front loading of U.S. corn this year could be more to do with Mexico’s policies and not a Trump presidency. With a potential new agricultural plan in Mexico, one concern is that Mexico could put a ban on GMO corn from the U.S.
Last year, we saw Mexico buy the most corn ever from the U.S. They started buying early on and that trend never changed. They started out the year strong and the country kept buying U.S. corn all year. In my mind, it is more of a value play for Mexico in securing cheap food for their people.
Is Mexico just buying cheap?
With December corn futures trading around $4.20-$4.25 – the cheapest in four years – they see good value. However, if Mexico enacts a GMO ban on U.S. corn, that could cause demand from Mexico to slow.
I like to tell everyone to watch what foreign countries do versus what they say they might do. For now, until probably late January 2025, we could see U.S. corn demand stay pretty strong.
Have questions? Feel free to contact me directly at 605-657-1978 or anyone on the AgMarket.Net team at 844-4AG-MRKT.
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