Mexico: Slowing poultry production, price shrink sorghum feed demand

By Aerin Einstein-Curtis contact

- Last updated on GMT

© GettyImages/izikMd
© GettyImages/izikMd

Related tags: Sorghum, Corn, Poultry, Mexico

The anticipation of poorer prices in Mexico's livestock and poultry sectors coupled with declining sorghum production and increasing prices are expected to reduce use of the feed grain in that market, says analyst.

The US Department of Agriculture (USDA) released updated information Thursday [January 16] regarding feed grain production and use in Mexico in a Foreign Agricultural Service report​.

Overall production for several feed grains including corn, sorghum and wheat is expected to decline in the 2019/20 marketing year, said the agricultural specialist.

Along with production, sorghum use in Mexico is expected to fall in 2019/20 based on price and challenges in livestock production, he said.

The declining domestic production of sorghum is anticipated to increase prices and shrink demand for the grain’s use in animal feed.

“Moreover, for MY 2019/20 the poultry sector may face consumers with reduced purchasing power due to the slowdown in Mexico’s economy,”​ the specialist said. “This industry is not likely to expand as rapidly in calendar year 2020 as in the previous year due to the weak gross domestic product (GDP) growth and slight deterioration of consumer purchasing power.”

“The total consumption estimate for MY2018/19 is also revised slightly downward,”​ he added.

Corn and sorghum details

Sorghum production and harvested area predictions for 2019/20 declined, the specialist said.  

“The sharp reduction in the [Mexican] government support programs for medium and big farmers, such as the Forward Contract Program, were the main reason for the expected reduction of planted area and production in this marketing year,” ​he added.

Total sorghum consumption is expected to drop in 2019/20, he said. However, imports of the feed grain are expected to increase to 670,000 MT based on the drop in domestic production.

“Estimated ending stocks for MY 2019/20 is revised downward in response to lower than previously estimated domestic production,”​ the specialist said.

Sorghum production in 2018/19 in Mexico also saw a downward revision to 4.476m MT based on a decline in planting and poor weather conditions during the fall and winter crop cycle, he said. “Also, the estimated stocks for the MY2018/19 was revised sharply downward to 185,000 MT, reflecting the reduced domestic production,”​ he added.

Corn production for the previous 2018/19 marketing year increased to 27,671m metric tons (MT) with the harvested area reaching 7.2m hectares, the specialist said. Increased ending stocks for 2018/19 are expected to carry over into the next marketing year. 

However, there are some questions about total production for 2019/20, he said. The anticipation is that dry weather conditions hampered the 2019 spring/summer crop cycle and lowered yields.

Wheat expectations 

Wheat production in Mexico in the marketing 2019/20 was lowered based on harvested area, the specialist said. Total production is expected to be about 3.21m MT.

Ending stocks fell slightly to 518,000 MT, he said. “Mexico’ sluggish economy and the consequent reduction of purchasing power continue to be the main factors that will lower consumption and imports,”​ he added.

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