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Mexico may pay high premium to source South American grain

A market analyst says Mexico’s talk this week to cease US grain purchases in response to rhetoric from the Trump Administration – may be easier said than done. Dale Durcholz with Illinois-based AgriVisor says Mexico will need to consider the costs of imported grain from Brazil and Argentina.

“And then you step back and go, ‘at $4.00 corn, is someone willing to pay at 10 to 12 percent premium?” says Durcholz.

Durcholz tells Brownfield the logistics of shipping grain to the end user in Mexico will also impact the overall price.

“If I bring corn out of Brazil or if I bring corn out of Argentina, I bring it into a port and then I have to unload it. Then I have to load it, either on a truck which can be expensive to ship long haul or I have to load it in a rail car” says Durcholz.

He says corn shipped into Mexico from the US is typically done on rail cars sent directly to the food processors.

Last year Mexico imported more than 12 million tons of yellow corn from the United States.  Mexico is also the second highest buyer of DDG’s and is a top three buyer of US soybeans.