Trump’s tariff threat fail to stall Mexican demand for U.S. wheat

20 July 20193 min reading

Jose Luis Fuente, head of the CANIMOLT, Mexico’s main wheat chamber, expects more U.S. wheat this year despite President Donald Trump’s tariff threat. Mexico is the top importer of U.S. corn, wheat, pork and dairy by volume.

Mexican bread and flour tortilla makers will likely use significantly more wheat sourced from the United States this year despite growing unease with President Donald Trump, Reuters reports. The U.S. government called off a threatened 5% tariff on all Mexican goods when Mexico promised to do more to stem the flow of Central American immigrants into the United States. But Trump warned he could revive the tariffs if Mexico’s Congress does not approve the plan. Mexico relies on wheat imports to supply about two-thirds of domestic demand. Overall, Mexican wheat imports will “very likely” be between 5.1 and 5.2 million tons, up from 4.9 million tons in 2018, boosted by a 4 percent jump in domestic demand, said Jose Luis Fuente, head of the CANIMOLT, Mexico’s main wheat chamber. The big jump in U.S. wheat imports, forecast by the chamber to reach between 3.5 million and 4 million tons this year, or as much 40 percent higher than last year, is noteworthy given Trump’s threat to slap tariffs on all Mexican exports and the possibility of Mexican retaliation. Trump suspended the threat after reaching a deal with the Mexican government to curb the flow across the border of migrants. He has since revived the tariff threat if Mexico cannot meet his demands. Fuente said U.S. suppliers are more convenient and that opposition to Trump does not play a major role in the industry’s calculations. “I’d love to send him a message that we’re not going to buy more American wheat, but that’s not viable,” Fuente told Reuters in an interview. Still, he said he expects more U.S. wheat this year because it is logistically more attractive, especially when moved by train, as well as due to the quality and price stability traditionally associated with American supplies. Last year, U.S. wheat imports totaled 2.8 million tons, down nearly 20% from 2017, central bank data show. For years, Mexico has been American wheat farmers’ top export market. While he emphasized that weather in the United States and elsewhere could scramble the forecasts, Fuente said wheat imports from Russia, which last year overtook Canada to become Mexico’s second biggest foreign supplier, is likely to reach around 1 million tons this year, similar to 2018 shipments. Last year, the Black Sea suppliers, including those from Ukraine, increased wheat exports to Mexico nearly three-fold compared to 2017. If trade strife continues between the United States and Mexico despite the deal, Argentine grain exporters are also ready to step in to meet Mexican food demand. “The moment that the U.S. sets up trade duties, we would be there,” Gustavo Idigoras, president of Argentina’s CIARA-CEC chamber of grains exporting companies, told Reuters. Argentine wheat farmers are seen selling around 100,000 tons to Mexican buyers this year, up from a 33,000 tonne cargo delivered in 2017. REUTERS

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