Mexico is purchasing more corn than normal from U.S. producers likely thanks to two factors: multi-year lows in corn prices and rhetoric by U.S. presidential candidate Donald Trump about building a wall along the U.S.-Mexico border. That’s according to Brian Splitt of Allendale.
“We don’t know how they’re going to pay for [the proposed wall], but it could be through trade policy,” Splitt tells host Tyne Morgan on the “AgDay” Agribusiness Update segment. “If I have the combination of those two things, if I’m Mexico, I am an aggressive buyer before we even see the election to make sure my needs are attained. I don’t want to have anything up for chance at this point.”
Meanwhile, exports to other countries are up, too. Corn exports are up 70% from the five-year average and are headed for destinations such as Brazil. China has opened the door to U.S. beef. Splitt advises against getting too hopeful these spot buys will last.
“I see this as more of a short-term issue for us,” says Splitt, noting Brazil had problems with its second-crop corn. “It could be a little bit disappointing down the road. Maybe USDA acknowledges this pace but then brings the numbers back down as we get into the first and second quarter of next year.”
Keep in mind the U.S. is doing some “catch-up work” on both corn and soybeans, with corn set to hit USDA’s sales target and soybeans running a little bit behind, Splitt adds.
Watch the complete interview with Splitt in the “AgDay” clip.
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