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Mexico’s economic growth is gradually improving, but food consumption remains vulnerable to income and price effects, according to a report from Rabobank – Mexico Agribusiness Outlook 2014: A positive year but full of challenges. The Mexican economy is expected to recover gradually in 2014, after a slow 2013, with Rabobank forecasting 2.9% growth, mostly occurring during the second half of the year. However, sector-specific challenges will continue to affect agribusiness. Grain and oilseed production is expected to be driven by declining prices and margins. Animal and meat prices and margins are expected to increase, although disease is expected to threaten both hog and poultry production, while the sugar and beverages sectors are expected to face a difficult year.
Sector Outlooks
Grain: Mexico’s grain production recovered from severe weather events during the past two years, but corn production remains constrained. Rabobank expects domestic grain prices to retain a bearish fundamental tone in 2014/2015. Declining prices and margins will be the main drivers for grain and oilseed production.
Animal Protein: The animal protein sector is likely to show positive margins as animal and meat prices are expected to be on the upside, while feed costs will remain constrained. Due to health issues, such as PEDv in North America, a severe contraction in hog supplies is expected. Poultry market expansion is likely but could be threatened by the return of avian influenza. Beef production remains constrained due to continued contraction of the herd.
Monday April 15, 2014/ Rabobank.
http://rabobank-food-agribusiness-research.pr.co
