Trade Dispute Lingers, But Mexico Is Buying U.S. Corn

A year ago, concerns about Mexico’s upcoming GMO corn ban made our 2022 Year in Review and was mentioned, among other global uncertainties, as a key issue facing U.S. agriculture in 2023. In March, we opened an Ag Forecast Network question to help users size up the uncertainty and benchmark their expectations (related backgrounder and trade dispute timeline here). With 2023 nearly over and Mexico’s original deadline (January 31, 2024) around the corner, it’s worth stepping back and reviewing where the issue stands.

More Clarity

When it comes to corn, Mexico, and trade, there are three critical trends (chart and details here). First, corn imports account for roughly 40% of Mexico’s domestic consumption. Second, most of Mexico’s corn imports – typically more than 90% – come from the U.S. Finally, feed accounts for nearly 60% of domestic usage. The biggest risk for U.S. agriculture was losing access to the cattle feed market.

Early in 2023, Mexico clarified that GMO corn imports could be used for feed and industrial uses. Stated differently, the ban was focused on human foods. These details were a major relief as a worse-case scenario was avoided.

Still concerned about the food-grade market and the overall precedent, the U.S. filed formal objections under the United States-Mexico-Canada Agreement (USMCA). Mexico hasn’t revised its stance, so the trade dispute continues.

Exports to Mexico

Mexico has returned as a large corn buyer with GMO corn imports allowed for feed. Figure 1 shows export commitment to Mexico at the end of each November. In November 2023, Mexico purchased 480 million bushels, a record pace, for the 2023/24 marketing year. Furthermore, activity was 35% higher than at the end of November 2022.

Figure 1. U.S. Corn Export Commitments – Mexico (Market Year Commitments as of the end of November). 2010-2023. Data Source: USDA FAS.

Figure 1. U.S. Corn Export Commitments – Mexico (Market Year Commitments as of the end of November). 2010-2023. Data Source: USDA FAS.

For a different perspective, Figure 2 plots U.S. corn exports to Mexico as a share of total exports. Since 2010, roughly 25% of U.S. corn exports were bound for Mexico. In 2019, activity was at a high of 35%. Keep in mind that the share changes in Mexico’s purchase activity (the numerator) and changes in total corn exports (the denominator).

Not shown in the chart is the 2023 calendar year activity. Through October, Mexico accounted for 40% of total U.S. corn exports. As mentioned, some of this is because of fewer corn exports in the 2023 calendar year (-28%) and additional Mexican purchases (+15%).

Figure 2. U.S. Corn Export to Mexico as a Share of Total Exports, 2010-2022 (Calendar Year Data). Data Source: USDA FAS.

Figure 2. U.S. Corn Export to Mexico as a Share of Total Exports, 2010-2022 (Calendar Year Data). Data Source: USDA FAS.

Wrapping It Up

While the formal trade dispute will linger well into 2024, the biggest uncertainties and risks (at least for corn bound for feed and industrial uses) were resolved in 2023. Often times, uncertainties that get largely resolved without bad outcomes seem to fade from the spotlight without much fanfare.

Of course, this particular issue is nuanced and challenges do remain. USTR continues to pursue its USMCA dispute against Mexico’s ban on GMO corn for human food on the grounds that the ban is not science-based.

For the current marketing year, which is adjusting to China buying significantly fewer bushels of corn, Mexico’s purchases have been a positive and welcome development.