USDBC MEXICO MONTHLY REPORT JUNE-JULY 2016

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USDBC MEXICO MONTHLY REPORT JUNE-JULY 2016 2017 USDBC International-US Bean Congress Back in April, the USDBC IMR in Mexico started requesting quotes from different Hotels in Cancun as the

The strength of the US dollar has increased US Tourism into Mexico.

1 USDBC MEXICO MONTHLY REPORT JUNE-JULY USDBC International-US Bean Congress Back in April, the USDBC IMR in Mexico started requesting quotes from different Hotels in Cancun as the preferred Fiesta Americana Grand Coral Beach did not have our preferred dates for We contacted other Fiesta Americana venues, RIU Hotels and Grand Velas in Cancun and in Puerto Vallarta. The strength of the US dollar has increased US Tourism into Mexico. With a continuous safer Mexico, the confidence of US, Canadian, European and Asian tourists, Mexico has come back to be in the top 10 tourist destinations around the world, which of course has increased demand and costs USDBC CONGRESS OPEN FOR REGISTRATION USDBC Mexico Report June

Shopping for our venue for 2017, was not easy, but not impossible.

Condesa in Cancun. The hotel has been remodeled and it counts with one of the nicest beaches in Cancun.

Registration is now open through our well known domain www.usbeancongress.

2 Shopping for our venue for 2017, was not easy, but not impossible. We were able to negotiate and secure a decent rate under the all-inclusive plan with Fiesta Americana Condesa in Cancun. The hotel has been remodeled and it counts with one of the nicest beaches in Cancun. It is 15 minutes from the airport and 15 minutes from town and from some of nicest Cancun Restaurants. Registration is now open through our well known domain We hope to see you participating in 2017 USDBC International-US Bean Congress. For any questions please contact me at raul@mercalimentos.com USDBC Mexico Report June

Year of the Pulses Celebration Sizzle Video As part of the 2016 Year of

by the US Embassy, a Sizzle video was put together to remember the event

The video is featured in the Spanish website that promotes USA Pulses.

The website is promoted in Facebook within the Latin-American consumers.

3 Year of the Pulses Celebration Sizzle Video As part of the 2016 Year of the Pulses Celebration coordinated by the USDBC and the USADPLC and paid by the US Embassy, a Sizzle video was put together to remember the event and continue promoting the consumption of pulses. The video is featured in the Spanish website that promotes USA Pulses. Other videos have been subtitled in Spanish and uploaded in this website. The website is promoted in Facebook within the Latin-American consumers. To watch this video, please click the following link USDBC Mexico Report June

4 Media Kit, Recipes, Translation and Subtitling of Videos Dry Bean and Garbanzo recipes were translated and incorporated to the website. Thank you to David McClellan for sharing some of the recipes from USDBC Mexico Report June

$about pulse fractionates and added value pulse ingredients including flours. The proposal was reinforced and justified by the 2016IYP initiative.$ On March of 2016, the ATO-FAS office in Mexico notified our offices that amongst the different proposals from other cooperator representatives in Mexico, our proposal had been accepted.

On March of 2016, the ATO-FAS office in Mexico notified our offices that amongst the different proposals from other cooperator representatives in Mexico, our proposal had been accepted.

A total of 10 important companies including pasta, snacks, tortilla and processed foods were recruited by USDBC representative for interviews with USDA Washington Cochran Fellowship

5 Pulse Fractionates and Added Value Pulse Ingredients In 2015, the USDBC IMR proposed to the Agricultural Trade Office in Mexico for a Cochran program to teach Mexican Food manufacturers about pulse fractionates and added value pulse ingredients including flours. The proposal was reinforced and justified by the 2016IYP initiative. On March of 2016, the ATO-FAS office in Mexico notified our offices that amongst the different proposals from other cooperator representatives in Mexico, our proposal had been accepted. So, in order to continue with the project, the USDBC IMR conducted a recruitment strategy to reach important companies to participate in the program. A total of 10 important companies including pasta, snacks, tortilla and processed foods were recruited by USDBC representative for interviews with USDA Washington Cochran Fellowship Program Offices and with the coordination of the US Embassy in Mexico. A total of 11 people were chosen to participate and the Cochran Fellowship Program Offices were very satisfied with the cooperation of the USDBC and the USADPLC Representation. USDBC Mexico Report June

From October 9 th through October 15 th 2016, the

Development Managers, Company Directors and one Chef will

North Crops Institute to learn about the procedures and

ingredients are incorporated into food formulas.

processing alternative snacks with the use of pulses.

paid for by the USDA, Washington, Cochran Fellowship

International travel for all the participants as the

In order to provide technical support, translation and

6 From October 9 th through October 15 th 2016, the participants that are composed mainly by Research and Development Managers, Company Directors and one Chef will attend a one week program to visit with pulses processors in the state of North Dakota. In addition the participants will attend a course at the North Crops Institute to learn about the procedures and technicalities that pulses requires as these added value ingredients are incorporated into food formulas. As of today, two of these selected companies have started processing alternative snacks with the use of pulses. The program will be ran by a third party contractor and paid for by the USDA, Washington, Cochran Fellowship Program, The USDBC and the USADPLC will sponsor the International travel for all the participants as the Cochran programs do not pay for International Travel. In order to provide technical support, translation and local coordination, Mariana Repetto our Research and Development Consultant will accompany the Mexican delegation. USDBC Mexico Report June

7 2016 SPRING-SUMMER PLANTING SEASON OFFICIAL REPORT OFFICIAL 2016 SPRING-SUMMER MEXICO DRY BEAN PLANTING SEASON IRRIGATED + DRY LAND SITUATION UNTIL MAY 30TH, 2016 STATE SURFACE PRODUCTION YIELD MT/HA programmed planted harvested damaged programmed obtained programmed obtained AGUASCALIENTES 9, , BAJA CALIFORNIA BAJA CALIFORNIA SUR CAMPECHE COAHUILA 5, , CHIAPAS 73,200 9,872 41, CHIHUAHUA 129,151 1, , DISTRITO FEDERAL DURANGO 253, , GUANAJUATO 80,958 6, , GUERRERO 13,025 9, HIDALGO 28,896 6,742 21, JALISCO 10, , MEXICO 6,149 1,862 6, MICHOACAN 4, , MORELOS 1, , NAYARIT NUEVO LEON 2,678 2, OAXACA 33,009 3,008 22, PUEBLA 56,072 26,404 63, QUERETARO 9,471 1,398 6, QUINTANA ROO SAN LUIS POTOSI 128,837 1,347 82, SINALOA SONORA 3,238 2,030 4, TAMAULIPAS 11, , TLAXCALA 3,198 1,878 2, VERACRUZ 12,887 6,310 9, YUCATAN ZACATECAS 622,082 20, , TOTAL 1,500,767 91, , Preliminary Data Source: SIAP-SAGARPA Planting update until July 15 th, 2016 Zacatecas reported a progress of 40% in their dry land bean planting with 236 thousand (out of a total of 591 thousand) hectares. This is considered a good progress as these were planted in the first half of July. The variety breakdown for dry land beans is: 49% black beans, 28% colored beans and 19% pintos. Their progress in planting irrigated beans is 83% with 26,344 hectares from a total program of 31,625 with the varieties: Flor de Mayo and Flor de Junio. Raining season in Zacatecas has not generalized however, they received enough precipitations to prepare their land and plant the hectares mentioned before. They are expecting average rainfall this season. USDBC Mexico Report June

8 Durango has also started to plant their dry land beans with close to 100 thousand hectares from the 253 thousand in the program. 95% of the beans planted are Pinto Saltillo. Weather situation is similar to Zacatecas, however, Durango has received stronger storms in their bean areas. It is important to mention that agricultural organizations in this state, continue demanding help from the government to obtain seed to plant the remaining 153 thousand hectares in the program, which belong to small producers that have no money to buy seed, as SAGARPA decided that this year they would not authorize the bean seed program as they did in previous years. It is expected that SAGARPA will announce the support for these growers in the next days as time to plant is running out. Chihuahua reported that they have planted close to 50% of their dry land beans with 60 thousand hectares of the 129 thousand they have programmed. 100% of these beans are Pinto Saltillo and Bill Z. Latest information from San Luis Potosi indicates they have almost concluded their planting with around 120 thousand hectares of colored varieties such as Flor de Mayo and Flor de Junio, Bayos and some Pintos. Guanajuato has also concluded the planting of 80 thousand hectares of similar varieties, however they are reportedly suffering of grasshopper plague. For your reference: DRY BEAN PLANTING AREA irrigated and dry land Zacatecas , , , , , ,082 Durango , , , , , ,974 Chihuahua 154,913 92, , , , , ,399 5 YEAR PLANTING-PRODUCTION BEHAVIOR SPRING-SUMMER Programmed Planting HA Planted Surface HA Production Obtained MT MEXICO BEAN CROP Zacatecas 524, , , , , , , , , , , , , , , , , ,000 Durango 229, , , , , , , , , , , ,000 98,399 17, , , ,412 85,000 Chihuahua 130, , , , , , ,913 92, , , , , ,833 35, , , ,752 75,000 Chiapas 75,729 72,361 71,575 72,289 73,802 74,055 70,594 76,892 73,425 74,716 74,134 73,098 37,242 31,061 41,954 43,622 37,030 40,000 San Luis Potosi 127, , , , , , ,906 62, , , , ,000 33,754 16,952 30,767 31,529 63,039 40,000 Guanajuato 86,779 89,099 93,118 91,216 91,286 89,209 91,726 85,688 96,611 91,325 81,905 82,000 48,065 30,999 52,192 63,866 54,689 40,000 Other States 260, , , , , , , , , , , , , , , , , ,000 Total 1,434,588 1,512,782 1,460,373 1,452,753 1,484,959 1,504,192 1,557,643 1,250,118 1,460,373 1,588,311 1,493,299 1,438, ,813 **368, ,807 1,039, , ,000 *Initial production estimations made with information provided by local agricultural authorities until Mar ** Year of extreme drought Mexico s Dry Bean Supply Demand Report In the July update of this report SAGARPA is corrected the forecast from 91 thousand MT last month to 77 thousand MT final inventories at the end of next September, 76% lower than in SAGARPA is also estimating that the national bean consumption for the agricultural year will be 1.1 million MT or 9 kilos per capita. Their breakdown by variety consumed is: 44& black beans and 25% pinto beans representing 70% of the total bean consumption. USDBC Mexico Report June

July 2016 Update Demand-Supply Beans 2015-2016 Thousands of MT Supply Demand Period Total Initial Inventory Production Imports Total Exports Consumption including autoconsumption Seed e/ Loss e/ e/

9 July 2016 Update Demand-Supply Beans Thousands of MT Supply Demand Period Total Initial Inventory Production Imports Total Exports Consumption including autoconsumption Seed e/ Loss e/ e/ Final Inventor Oct Sep , , , Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep e/ Estimations Preliminary production 2015 SS Cycle: 775,043 MT Estimated Production 2016 FW Cycle: 200,650 MT Source: Estimations made by SAGARPA-ASERCA Technician with SIAP information Bean Quota Permits from Countries Outside NAFTA As reported to you earlier this week, the list of Non-NAFTA Quota definitive permits allocation has just been released and there is a new company included: Bodega de Granos El Alazan, which has been authorized to import beans from countries outside of NAFTA, the maximum volume per company of 12,500 MT. This update indicates that only Digrava, El Alazan and one other company named Importadora y Exportadora San Blas form the north of Mexico, have the permits. Seems to be that the company located in Reynosa Tamaulipas named Comercializadora Inter-Home has not been granted the permit. We will continue following up on these updates and will keep you posted. To be considered: this year s Bean Quota was announced Tuesday March 29th, 2016 in the Federal Register and it was increased only for this year from 100 to 150 thousand MT and is valid April 1 through November 30th also only for The increase was because of the 2015 lower production and to avoid high prices. Rules include: 1. Importers have to present proof of purchase with the application to obtain the permits. 2. Maximum volume per company or individual will be 12,500 MT this time, however the normal is 25 MT. USDBC Mexico Report June

10 3. Each company or individual will have 45 days from the date the permit is issued, to import the beans The tariff numbers considered are: Tariff Description Volume *Additional Volume for 2016 only White Beans Except those considered in tariff Black Beans Except those considered in tariff ,000 MT 50,000 MT The rest of the beans *Only for 2016 to be distributed in the April 1st - November 30th, 2016 period Comments from the trade: After the announcement of the need of beans in Brazil, quota permits in Mexico became less attractive since Argentina and China which are the countries that could sell beans to Mexico, increased prices and are expected to sell their product to Brazil. However, the high prices of U.S beans are still a factor that could make Mexican importers try to bring some cheaper beans from China if necessary. CENTRAL MARKET PRICES AND SALES ANALYSIS BY USDBC USDBC Disclaimer: In the following section the USDBC Mexico office analyzes dry bean prices from SNIIM reports. In addition, the USDBC Mexico office place calls to the Mexican trade to complement the information. The USDBC will not be responsible for third party transactions based on this report. US Black beans prices continued at prices from 19 to 22 pesos per kilo in Mexico City, Monterrey and Guadalajara. Mexican black beans remained with no changes at prices around 15 pesos per kilo. US Pinto beans prices: US pintos in Mexico City recovered again from 22 to 23 pesos per kilo. In Monterrey remained at 21 pesos per kilo. National pintos remained at around pesos per kilo in Mexico City, Monterrey and Guadalajara. U.S. Alubias: small and large alubias remained at prices from to 22 pesos per kilo in the market. Peruanos, Mayocoba, Azufrados.Prices increased a little bit and can be found from 25 to 35 pesos per kilo. Colored varieties: Bayos, Canarios, Flor de Mayo and Flor de Junio.- Prices of these varieties continue very high between 18 and 25 pesos per kilo. USDBC Mexico Report June

11 Wholesale and Semi-wholesale Prices Report MONTH:June 2016 MONTHLY CENTRAL MARKET WHOLESALE PRICES REPORT MEXICO CITY MONTERREY GUADALAJARA SINALOA PRODUCT product MARKET VAR MARKET VAR MARKET VAR MARKET VAR VARIETY origin PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) % (state/country) current before current before current before current before BEANS Imported Black Imported % % % Jamapa Black Zacatecas Nayarit Black NAY % Bola Black ZAC % % Veracruz Black VER % Imported Pinto Imported % % Pinto Saltillo ZAC. Pinto Saltillo NAY % Pinto Saltillo CHIH % % Pinto Saltillo DGO. Small Alubia Imported % % % Large Alubia Imported % % % Flor de Junio ZAC % % Flor de Mayo ZAC % % Bayo Berrendo JAL % Bayo ZAC % % Garbancillo ZAC Canario SIN % Cacahuate Bola Hgo. Garbancillo zarco JAL % Azufrado SIN % % Mayocoba SIN % Peruano SIN % % % % ZACATECAS MERIDA DURANGO NAYARIT PRODUCT product MARKET VAR MARKET VAR MARKET VAR MARKET VAR VARIETY origin PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) % (state/country) current before current before current before current before BEANS Imported Black USA Jamapa Black Zacatecas Nayarit Black NAY % % Bola Black ZAC % % Veracruz Black VER. Imported Pinto USA Pinto Saltillo ZAC % Pinto Saltillo JAL % Pinto Saltillo CHIH. Pinto Saltillo DGO % Small Alubia Imported % % % % Large Alubia Imported % % % Flor de Junio ZAC % % % Flor de Mayo ZAC % % % % Bayo Berrendo JAL. Bayo ZAC % % % % Garbancillo DGO % Canario SIN % Cacahuate Bola GRO. Garbancillo zarco JAL % Azufrado SIN % % Mayocoba SIN % % Peruano SIN % % % USDBC Mexico Report June

12 MEXICO NEWS CLIPPINGS USDBC Disclaimer: In the following section the USDBC disseminates information published in Newspapers and Magazines related to beans (excerpts). The statements or numbers shown in each article are not necessarily in agreement with the USDBC. At Risk, the Planting of Auto-consumption Beans and Corn in Chihuahua El Heraldo del Noroeste July 13, 2016 Cuauhtemoc.- There will be no dry land corn and beans production in the sierra area for auto-consumption since there will be no support to obtain seed this year, said the leader of Human Rights in this state. He commented that local indigenous people can still plant until the last day of July however they cannot pay for the seed so they require 100% support from the government. Demanding to Increase Seed Program El Siglo de Durango July 15, After the storms in Guadalupe Victoria, bean areas are ready to be seeded, but there is no seed. In the need of seed for this agricultural cycle members of the Popular Agricultural Organization are willing to start taking the facilities of the local Sagarpa delegation if they fail to respond to the bean producers demanding the increase of the seed program to obtain the necessary to plant this Spring-Summer cycle. The leader of this organization Sergio Silva, warned that they had told in advance to Tomas Castillo at SAGARPA that they needed the program. Silva said that the current program is insufficient since the producers cannot pay for the bean seed currently selling at 35 pesos per kilo. To make it worse, to this date there are many bean producers that sold their beans to the elevators participating in the government program, have not received the 2 thousand pesos per MT premium from the 2015 crop. He said that in this context, SAGARPA is showing that they do not have the will to support the planting of beans this year although there is a lack of this food in Mexico. Silva stated that they currently need seed to plant 160 thousand bean hectares which correspond to the small producers since the other 80 thousand hectares belong to commercial producers. 21 Municipalities with Grasshopper Plague Union Guanajuato July 11, 2016 Guanajuato is the second state with the highest population of this plague, and the one SAGARPA will spend more money on to eradicate this plague in this These insects are considered a plague in six states: Chihuahua, Guanajuato, Puebla, Queretaro, Tlaxcala and Zacatecas and the budget to fight them this year is 9.3 million pesos but only in Guanajuato and Chihuahua the government will spend 2.5 million each this season. USDBC Mexico Report June

13 Grasshoppers attack mainly the following crops: corn, beans, barley, sorghum and other crops. Although the size of the population in Guanajuato has not been released this year, SAGARPA recognizes that last year was one of the most complicated years since the delay of rainfall promoted the production of this insect. The grasshopper species that inhabits the state of Guanajuato is Sphenarium. Economic Report Good economic conditions will likely keep inflation rates, low in Mexico. External conditions have deteriorated and this could affect prices. The decision of increasing Mexican interest rates in the last day of June in 50 points base, had the purpose of avoiding the Mexican peso to continue depreciating as it has been happening in the last months. The Central Bank (BANXICO) will be observant of the behavior of factors that could affect inflation rate and medium and long term economic expectations especially the exchange rate. On the inflation rate, a recent report indicated that during 2015 Mexican families income grew between 2.7 and 3 percent real, supported by the lower than 3% inflation rate, representing a purchasing power improvement. The Private Sector informed that the measures implemented by the economic instances to achieve the reduction of the debt are in the correct path. However, analysts estimate now a lower GDP growth for 2016 and consider that domestic consumption continues to be the engine for the Mexican economy however it is starting to be slower than last month, since the most recent indicators show that retail sales, services and private consumption registered a decrease in the the last weeks. On BANXICO s decision to increase the rates, the PS considers that it sent good signals to the markets although the effect on the exchange rate was not significant and it continues close to 19 pesos per U.S. dollar. On the other hand, the Mexican government has announced that will increase the price of electricity and gasoline in July. The Private Sector considered that this will have a negative impact on the consumption. The increase of these two products for the industrial sector will mean an increase in costs and with a high exchange rate these will soon transfer to the consumer prices increasing inflation. In spite of these potentially negative factors, the Organization for the Economic Cooperation and Development (OECD), estimated that Mexico continues to have solid macroeconomics that will allow to navigate the complicated economic scenario, with a privileged position within the emerging countries. They consider, -again-, that the low inflation rate enjoyed by Mexico, are very positive allowing us to borrow money to invest. The OECD also said that Mexican unemployment rate has decreased since 2009, under the median in the region with 4.2% in 2015 and a highlight in employment for the young people, although the quality of the employment can be improved. Last but not least, the BREXIT and the Mexican economy: before the BREXIT, several analysts considered that it would not affect Mexico, however now that it happened, they corrected and concluded that it will actually affect the trade and the exchange rate, and ultimately the GDP growth which was revised from 2.4 to 2% for 2016 and from 2.7 to 2.4% for Thus the BREXIT, became one more external factor affecting the Mexican economic growth at least this year. USDBC Mexico Report June

Exchange Rate Average exchange rate in June was 18.50 pesos per U.S. dollar.

PRECIPITATION MAPS 2016 MEXICO SPRING- SUMMER CYCLE DRY BEAN STATES Following are the maps of the most important dry bean production states for the 2016 Spring-Summer dry land cycle officially

14 Exchange Rate Average exchange rate in June was pesos per U.S. dollar. Exchange rate on the last business day of June was pesos per U.S. dollar. PRECIPITATION MAPS 2016 MEXICO SPRING- SUMMER CYCLE DRY BEAN STATES Following are the maps of the most important dry bean production states for the 2016 Spring-Summer dry land cycle officially monitored by the USDBC in Mexico: Zacatecas, Durango, Chihuahua, San Luis Potosi and Guanajuato. Measurements are in rain milimiters. Raining season has started in Mexico and most of the Mexican territory has started to receive precipitations. In the maps below you can see the progress in the 5 bean states we follow up every month. In the first week of July, precipitations started in Zacatecas, Durango and Chihuahua, and the maps changed from the brown collor 50 rain mm range last month to the greeener ranges of rain mm in the forst two weeks of July. Although rainfall season has not generalized in these states, they ve had enough water to start planting: USDBC Mexico Report June

15 Mercalimentos Consultores S.C. In Market Representatives , USDBC Mexico Report June

16 USDBC Mexico Report June

17 USDBC Mexico Report June

USDBC MEXICO MONTHLY REPORT MAY 2017 NEW! FIRST 2017 MX BEAN PLANTING 2017 SPRING SUMMER CYCLE PROGRESS REPORT

USDBC MEXICO MONTHLY REPORT MAY 2017 NEW! FIRST 2017 MX BEAN PLANTING 2017 SPRING SUMMER CYCLE PROGRESS REPORT 2017 Spring-Summer beans Irrigated beans, 5 to 10% of the total depending on the state: All