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 of these should be planted by now, especially in San Luis Potosí, Guanajuato and Zacatecas. See the progress report above until May 31 st, released couple of days ago. Dry land beans, 90% of the total: Rainfall season has not yet started and there is an important level of dryness in general in the bean states this year. The dry land planting season starts in about two weeks on June 25, however, it is important to keep in mind that most of these beans, have been planted between the first half of July and first week of August in the last couple of years. Current Market Situation as of June 15 th, 2017 Market continues very quiet. The 100 thousand MT bean quota that opened in mid-april has not been used at all, in part because of the lack of competitive product and prices from potential suppliers outside of NAFTA (China and Argentina) and because there are inventories available in the country. The 2017 Fall Winter beans: Reportedly, there are still inventories (unknown amounts) of Azufrado and Mayocoba beans that remain in warehouses of producers and elevators the state of Sinaloa, according to our local trusted sources. Although there are no solid numbers on the volumes available, prices continue of these beans continue low indicating the lack of sales. False news saying USDBC Mexico Report May 2017 1
prices have reacted up back to 25 to 27 pesos per kilo have been published recently however, prices are still down at 21 to 22 pesos per kilo. Apparently these elevators and producers will continue waiting for better prices to sell, however, they will have a short window to do it as the S-S planting season has resumed, irrigated beans have been planted and these are clear and colored beans that might compete against Sinaloa s beans. See below the last 2017 F-W season report, where SAGARPA is reporting the final production of over 140 thousand MT, only in Sinaloa. Elevators and traders that purchased at high prices in the beginning of the harvesting season are struggling to recover their investment. 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 in May 2017, registered reductions from 8% to 15% in the three most important markets in Mexico City, Monterrey and Guadalajara. In spite of this, prices continue around 10% higher than Mexican black beans in Mexico City and Monterrey. Prices in Guadalajara are now similar to MX black beans. US Pinto beans prices in May remained without changes vs. de previous month, selling at prices from 22 to 24 pesos per kilo. MX Pintos prices are around 20 pesos per kilo, a 10 to 15% difference vs. US Pintos. USDBC Mexico Report May 2017 2
Peruanos, Mayocoba, Azufrados prices: remained very similar to last month s, with very slight changes depending on the market. Prices still high ranging between 26 and 35 pesos per kilo. Colored varieties: Bayos, Canarios, Flor de Mayo and Flor de Junio. No changes in prices of these beans in the different markets vs. last month. Wholesale and Semi-Wholesale Prices Report USDBC Mexico Report May 2017 3
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. Mexico is Importing Beans, Meat and other Food Products to Fight against High Prices Expansión June 13, 2017 Mexico purchased in foreign market meat and other products to avoid sky rocketing prices, said Ildefonso Guajardo, Secretary of Economy. Mexico has imported beans and other grains with the purpose of facing the increase of prices that started in January. In the last months, Mexico opened the door to imports of meat, rice and beans. Decisions were made and the quota to import beans was opened, we established a quota for meat Guajardo said. Risk of Drought for Beans and Corn in Zacatecas Noticieros Televisa June 12 th, 2017 Zacatecas has accumulated 6 months of lack of regular rain. More than 50 thousand cattle producers and 80 thousand agricultural producers depend on rainfall season. The grass is not growing and there are no good conditions to plant, there is no regular rain since November and the cattle is at risk of dying said Antonio Acosta, a producer. SECAMPO (State Secretariat of Ag.) declared that they will implement support programs. We will have to start an assessment on the lack of rain and implement measures, said Adolfo Bonilla, Zacatecas Secretary of Ag. At the present time, the lack of rainfall is being felt in 30 of the 58 municipalities where 90% of the beans and corn are planted in the state. Sagarpa to Invest 46 Million Pesos in the 2017 Spring-Summer Cycle El Sol de Zacatecas May 26, 2017 SAGARPA Zacatecas informed they will invest 46 million pesos in resources to support the planting of dry beans and 36 thousand hectares of: malted barley 25 thousand, 7 thousand of wheat for bread and 4 thousand of sunflower in the upcoming 2017 Spring- Summer cycle. SAGARPA expressed concern for the lack of rainfall however, they said that rains are expected to resume in mid-june. According to the State Department of Ag. and Conagua, this will be a good agricultural year for the state of Zacatecas. Conagua (National Water Commission) also said that dams in the state are at 79% of its capacity. Delayed Raining Season this Year: Secretary of Ag. Calzada Rovirosa El Sol de Zacatecas May 26, 2017 During his visit to Zacatecas, the Secretary of Agriculture Jose Calzada Rovirosa said that the rain forecast indicates rainfall season will be late, however, with similar amounts of rain as in 2016. He mentioned there is a lack of rain in the states of Guerrero, Chiapas, Oaxaca and the central part of Mexico. When asked if there will be enough resources to support producers in the state, he answered that in 2016, they put a lot of effort in Sinaloa and Michoacan and that this year they will focus on Zacatecas and San Luis Potosi. He concluded saying that with all components of the support they will invest 2 thousand million pesos in Zacatecas. USDBC Mexico Report May 2017 4
ECONOMIC REPORT For the first time in two years, the Mexican currency is starting to show strength again and analysts have revised the expected exchange rate for 2017 down from 20.25 to 19.60 pesos per U.S. dollar. Economic growth expectations have increased from the previous 1.7% to 2% as the pressure of the new U.S. administration is not having a negative effect on Mexico anymore, according to the economists. The Mexican peso was tested couple of days ago during the second week of June, when the FED increased interest rates, and the exchange rate remained with no changes after that. Nevertheless, the damage in the Mexican inflation rate has been made and it has reaching almost 6.16% annual to May 2017, the highest since the meltdown in 2009 and the most damaging in terms of purchasing power especially for the lower income household. This inflation rate, has already consumed three consecutive salary increases made since last year. The current expected inflation rate to close the year is at 5.9%, not much improvement despite the better economic expectations accounted before. Still it is good news that important financial groups are considering that the Mexican economy is and will continue in the recovery path with positive expectations for the remaining months of this year. The good performance has been fueled by the increased foreign demand of Mexican manufacturing products and a moderate increase in domestic consumption. The risk factor remains the upcoming NAFTA re-negotiation, although this is expected to have a positive outcome, however might cause volatility during the process in the coming months. The Secretary of Agriculture Jose Calzada stated that Mexico has the agricultural strength to promote a positive NAFTA re-negotiation. With the important increase in agricultural exports that have reached +29 billion dollars to different parts of the world, Secretary Calzada considers that Mexico is now in a good position to face the negotiation. Good news is also, positive decision on the sugar agreement just last week, that will lift some pressure to the NAFTA re-negotiation. Although not perfect, both the Mexican and U.S sugar industries seem to be contempt with the results. NAFTA re-negotiation is scheduled to resume next August. Also on Free Trade Agreements, Mexico and China announced this week during the Chinese Fair in Mexico, that both countries are ready to concrete a bilateral FTA that will benefit the trade between both countries, after 45 years of diplomatic relationship. The Chinese Ambassador in Mexico said that his country is very open to the negotiation. China is today, Mexico s second commercial partner after the United States. Exchange Rate Average exchange rate in May was 18.50 pesos per U.S dollar. Exchange rate in the last business day of May was 18.66 pesos per U.S. dollar WHEATHER 2017 SPRING SUMMER BEAN PLANTING SEASON RAINFALL MONITORING FOLLOW-UP Comments: Rainfall season in the most important bean areas in the states of Zacatecas, Durango and Chihuahua is delayed at the beginning of the planting season in the dry land areas as of June 15 th. Although at this moment there is no reason to believe that there is a drought situation in these regions, we present here the latest CONAGUA (MX Natl Water Commission) Drought Report until May 31 st. 2017. The areas of interest for our industry are those with numbers: 13 corresponding to Durango and 14 corresponding to Zacatecas, San Luis Potosí and Guanajuato. As you can see in these two areas, CONAGUA is identifying parts of the land as D0 Abnormally Dry and a few spots with D1 Moderate Drought and the letter S = short period < 6months and L = long period >6 months. USDBC Mexico Report May 2017 5
In the chart on the right side of the map are the percercentages of land affected: Land without affectation is the first column D0 Abnormal Drought D1 Moderate Drought D2 Severe Drought D3 Extreme Drought D4 Exceptional Drought We will continue monitoring this map and report if necessary. In the next pages you will find the regular rainfall maps of the last 3 months in rain millimiters. USDBC Mexico Report May 2017 6
2017 Precipitacion Maps in the Nation Rain milimeters Current MAY 2017 Historic Current APRIL 2017 Historic Current MARCH 2017 Historic USDBC Mexico Report May 2017 7
2018 USDBC CONGRESS WEBSITE READY TO LAUNCH BY END OF JUNE 2017 www.usbeancongress.com USDBC Mexico Report May 2017 8