April 24, 2012

Based on assumed normal weather conditions and an increase in harvested area stimulated by a governmental domestic support programme, the post/new marketing year (MY) 2012-13 total Mexican oilseed production forecast is increased slightly to 298,000 tonnes.

This programme established various oilseed production targets and assists oilseeds growers with support for planting, purchasing improved seeds and fertilisers, and technical assistance. The programme offers technical assistance for increasing seed planting density, promotes the use of fertilisers and improvements in plant nutrition, and encourages efficient technological application of phytosanitary controls.

The programme provides support for up to 15% of the average cost of technical assistance, with a limit of MXN1,100 (US$84) per hectare for the production of soy, rapeseed, and sunflower seed. Domestic production represents only 5% of total domestic consumption, as imports have displaced much domestic oilseed production with almost all oilseed imports originating from the US.

Due to proximity and lower freight costs, US suppliers should remain price competitive and increase its market share. For MY 2011-12, the US share is expected to remain at about the same level, 73%, as it was in the previous year.

The post/new estimated total oilseed production, planted areas, and harvested areas for MYs 2010-11 and 2011-12 have been revised upward due to recently released statistics from the Secretariat of Agriculture, Livestock, Rural Development and Fishery (SAGARPA). According to SAGARPA, genetically-enhanced (GE) oilseed varieties have not been officially approved for commercial planting in Mexico.

The post/new MY 2012-13 (October-September) soy production forecast is raised to 205,000 tonnes due to a slight expansion in harvested area and assuming normal weather conditions. In addition, it was recently announced that the governmental Pro Oilseeds programme will continue for the foreseeable future.

Market analysts have stated that despite strong domestic demand for soy and the continuation of the Pro Oilseeds programme, it is unlikely that greater expansion of soy planting will take place. The two main factors that inhibit soy production are the low yields and quality issues.

Approximately 90% of Mexico's soy areas are rain-fed and, consequently, weather continues to be the predominant factor. Tamaulipas produces the largest portion of Mexico's soy crop. One of the main soy crushing companies in Mexico has already acquired approximately 90% of Tamaulipas' expected soy harvest (82,000 tonnes) for MY 2011-12. Soy crushing companies have complained about the high foreign material content of the crop and some other quality issues with Tamaulipas's soy. Market analysts have stated that soy production in Tamaulipas exists solely to the support programmes run by the Mexican government.

For MY 2010-11, post/new total soy production, planted areas, and harvested areas forecast have been revised upward from USDA/Official estimates based on final data SAGARPA. Similarly, the planted and harvested areas estimates for MY 2011-12 have been adjusted upward based on SAGARPA's updated information.

Despite the fact that nearly 15,000 hectares of land are currently using genetically–enhanced soy seeds under the Mexican government pilot programme, SAGARPA has not officially approved the GE seed for commercial planting. Below is a table with a breakdown of area planted with GE soy by state.