Drought in Mexico Increases Demand for Imported Grain

Mintec Global
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Prolonged Dry Conditions Affect Crop Yields

Mexico is currently in the midst of its winter crop harvest, but a prolonged drought has led to significant challenges. The reduced rainfall has not only decreased the area sown for wheat and corn but has also drastically cut their yields.

Insufficient Water Levels Impact Wheat Production

Almost all wheat in Mexico is grown on irrigated land, making sufficient water levels in dams crucial for a successful harvest. This year, the dry weather has caused water levels in reservoirs to drop below necessary levels, resulting in poor wheat yields.

Sharp Decline in Corn Production

Corn production has also been hit hard by the drought. According to the USDA Foreign Agricultural Service (FAS), Mexico’s corn output is estimated to be 23.3 million tonnes for the 2023/24 season. This marks a 17% decrease from the previous season’s record of 28.1 million tonnes.

Breakdown of Corn Crops

Mexico cultivates two corn crops annually:

  • Summer Corn: Sown from April to August and harvested from October to January, accounting for 70% of the total production.
  • Winter Corn: Sown from November to January and harvested from April to July, making up 30% of the total production.

Reduced Estimates for Planted and Harvested Areas

Authorities have lowered estimates for planted and harvested areas, as well as yields in most regions. The main reasons include low moisture reserves during the planting period, insufficient irrigation, and crop damage from pests and diseases.

Coffee Production Also at Risk

The persistent dry weather in the south of the country since January is a major concern for coffee producers. Nearly 80% of coffee plantations are already suffering from a lack of rainfall, which could reduce coffee production by 30%.

Widespread Impact on Agricultural Land

Experts estimate that approximately 170,000 hectares of agricultural land will be adversely affected by the drought.

Conclusion: Factors Influencing Future Prices

Several factors could determine the future trends in grain prices in Mexico:

  • Rainfall Patterns: Any significant changes in rainfall could either alleviate or exacerbate the current situation.
  • Irrigation Improvements: Enhancements in irrigation infrastructure could help mitigate the impact of future droughts.
  • Pest and Disease Control: Effective management of pests and diseases could improve yields.
  • Global Grain Markets: The availability and price of imported grain will also play a crucial role in stabilizing local grain prices.

Monitoring these factors will be essential for understanding the future stability of grain prices in Mexico.