Recently, Doane Advisory’s Alan Barrett highlighted the addition of a new crush facility in Mexico, and the impact that plant might have on demand for U.S. soybeans. Further supporting this expectation for continued demand growth in the year ahead is a recent report from the U.S. Department of Agriculture’s (USDA)Foreign Agricultural Service (FAS) attaché.

According to the Post, the removal of support programs for medium and large oilseed producers, coupled with relatively inelastic demand from the livestock sector, is expected to help support continued demand for soybeans in the upcoming 2020/21 marketing year.

Mexico’s current president, Andres Manuel Lopez Obrador, has focused on bringing positive changes to Mexico’s agricultural industry for small farmers. In the process, support programs which provided price protection for larger operations have been all but eliminated in the 2020 Federal Expenditure Budget. Without this protection, the Post sees oilseed plantings falling 35% below USDA’s official estimate for 2019 to just 155,000 hectares in 2020.

Despite the considerable setback expected to occur in soybean plantings, the attaché sees rebounding yields helping to prevent production losses in the marketing year ahead. The Post forecasts Mexico’s soybean imports to rise 1.7% from the current marketing year to reach 6.100 million in 2020/21. Mexico’s domestic crush is forecast to rise by only 0.8% from 2019/20 to reach 6.250 million tonnes in 2020/21. This modest growth comes despite expectations for poultry meal consumption to rise 2% and given increasing domestic crush capacity suggests that more imports may be needed to meet demand for soybean products.

According to latest weekly FAS export figures, Mexico has purchases of U.S. soybeans on the books new-crop shipment totaling 501,044 tonnes. Outstanding sales for 2020/21 are running slightly above the same week in each of the previous three years and are slightly below the highest levels of 562,691 tonnes in 2016. Given the Post’s forecast for Mexico’s soybean imports in 2020/21 which is 47.8% above 2016/17 levels, these latest data suggest that Mexico will soon increase its purchase pace of U.S. soybeans this summer.

Work done by U.S. trade groups such as the U.S. Soybean Export Council (USSEC) and others have kept U.S. soybeans flowing to customers around the world during the COVID-19 pandemic to meet customers’ growing demand needs.