No. 1 Corn Buyer Holds Bearish Wild Card

February 13, 2017 12:00 PM
 
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No tariffs have been imposed yet in the war of words between the administration of President Donald Trump and Mexico. But the dispute between the two countries deserves producers’ attention because of its implications for agriculture if financial or policy changes unfold, argues Jim McCormick of Allendale.

“Trade agreements that have occurred over the last 30 to 40 years have really helped out American agriculture,” McCormick tells “AgDay” host Clinton Griffiths on the Agribusiness Update segment for Monday, Feb. 13, 2017. “We sell over $1 billion worth of beef, $1 billion worth of pork, $1 billion worth of chicken to Mexico alone. They’re also our biggest corn importer. If Trump would push hard to Mexico, will they push back? And how might they push back?”

One option: Mexico could begin sourcing corn from places such as South America.

“I had a customer who said, ‘There’s no way they’ll buy South American corn. They’ll have to buy it from the U.S.’ Well, the point I like to make is we import corn from Brazil twice a year out into the East Coast,” McCormick says. “It seems crazy, but we do. Economically, think about it: You can bring corn in from the East Coast of the U.S. from a foreign country compared to bringing it in from Ohio, Indiana.”

More broadly, the Trump administration’s comments about trade also have targeted the other two nations—China and Canada—that round out the top three trade partners for the U.S. Trump has called China a currency manipulator, and he has pointed to NAFTA, which includes Canada, as one of many deals that needs to be revisited.

“It’s something that producers just need to keep an eye on,” McCormick says. “If you start hearing [about] tariffs and repercussions, the fact of the matter is that’s going to be bearish American agriculture.”   

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Comments

 
Spell Check

Concerned reader
state center, IA
2/13/2017 02:06 PM
 

  Typical article posted by the AgWeb Liberals. Think about the other industries outside of agriculture that would cause Mexico to suffer... like tourism and factories that would be forced to come back. We have a lot of leverage to get what we want and keep our borders protected. Let the man do his job and as an ag news source you should be finding ways to find the positives in our Republican president.

 
 
Ray T. Bohacz
Hackettstown, NJ
2/13/2017 05:02 PM
 

  I agree 110% with Concerned Reader. Let us look at the facts: 2015 Trade Deficits Mexico($60 BILLION), Canada ($15.5 BILLION), Japan ($68.6 BILLION), Germany ($74.9 BILLION) and China ($367 BILLION). Mexico sends almost $ 4 BILLION of veggies to the US. Here on the East Coast they use Canadian corn to make ethanol and bring South American corn and beans into Port Newark. If anyone thinks these are good trade deals I do not know what to say to them. Think of it the other way: Do you think all of the countries that are listed above want to lose the U.S as a customer? Who will they then sell to. Do not worry about who will buy our grain, etc.; the proper mindset is that WHO will replace us to by there products. For once we should think America First and if we stop importing and buy our own crops and products every one in America will do well. We cannot import our way to prosperity. President Trump will make America great again but be patient, he is not even in office one month. He cannot fix what Obama did for eight years in 25 days. Believe in America, the farmer and our president and it will be Great Again for all of us!

 
 
Hal
Menlo Park, CA
2/13/2017 03:33 PM
 

  Very short sighted response "Concerned Reader". You should look at history. In 1980 President Carter used ag trade as leverage with Russia. How much grain have we sold to Russia since? Zero. They went to South America and developed competing markets and other countries can and will do this again. By the way, it took four years to negotiate NAFTA and get it approved by Congress. You'll likely be burning you cheap corn for heat by the time he gets it renegotiated and approved.

 
 

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