Mexico has been on a big grain buying spree in recent weeks.
It has been booking up substantial volumes of wheat and corn out of the United States as it continues to increase its grain imports and dependence on foreign countries to meet growing domestic demand.
In the week to September 30, Mexico purchased 801,400 tonnes of corn from the US.
It was the biggest buyer, securing almost 64 per cent of total US sales for that week.
Wheat acquisitions for the same week were 89,100 tonnes, and Mexico was again the biggest customer - with almost 27pc of total sales.
Mexico also took top billing in the rice stakes, booking 38,200 tonnes from the US, or 52pc of the week's trades.
The strong purchasing pattern continued in the week to October 7, with the US Department of Agriculture (USDA) reporting corn sales to Mexico at 790,20 tonnes, or 76pc of the week's reported US corn business.
Wheat transactions were higher than the previous week at 127,800 tonnes, which was second to the Philippines on the total US sales listing.
Weekly US rice sales were 33,900 tonnes and Mexico scooped up 87pc - or 29,600 tonnes.
The US is expected to remain the principal supplier of grains to Mexico in the 2021-22 marketing year due to logistical advantages and a long history of bilateral trade.
That said, Mexico has expanded its sources in recent years as major producers actively seek to challenge Amerinca's market dominance into its southern neighbour.
In a recent report from Mexico's National Agricultural Council, it was revealed 65pc of the nation's domestic wheat consumption in 2020 was imported, compared to 55pc in 2006.
In the same 15-year period, the proportion of corn demand met by imports increased from 26pc to 37pc.
For rice, the ratio rose from 70pc in 2006 to 83pc last year.
The increased imports came despite a concerted government incentivisation scheme to encourage small farmers to increase the production of basic grains, such as wheat and rice.
While these schemes are slowly having the desired outcome, the increase in output is much slower than the burgeoning demand.
In the September grain and feed update from the USDA's Foreign Agricultural Service (FAS), Mexico's wheat production was increased by 0.2 million tonnes to 3.2 million tonnes, compared to its May estimate, on the back of favourable seasonal conditions.
This is 0.1 million tonnes higher than the official USDA estimate and 0.235 million tonnes - or 8pc - higher than the 2020-21 crop.
But it is still 1 million tonnes lower than the record crop of 4.2 million tonnes in the 2008-09 season.
Wheat is deemed the second most essential cereal in the Mexican diet.
It represents 40pc of total household expenditure on cereals and provides about 10pc of the total calories in the Mexican diet.
Primarily driven by population growth, wheat demand for human, seed and industrial use is forecast to increase by 1.4pc to 7.1 million tonnes in 2021-22, compared to the previous marketing year.
Demand for wheat from the stock feed sector is forecast to increase by 50pc to 300,000 tonnes.
While relatively small compared to the demand for human consumption, the increase does reflect a higher inclusion rate in animal rations - particularly for the pork sector - at the expense of corn.
Relatively low carry-in stocks and the higher demand has pushed projected wheat imports up to 5.1 million tonnes, which was 8pc higher than in 2020-21, but still 5.3pc shy of the record 5.37 million tonnes imported in 2016-17.
At 3.46 million tonnes, Mexico was the biggest market for US wheat in the 2020-21 season, just ahead of China on 3.21 million tonnes.
On the corn front, the September FAS update is calling 2021-22 production as unchanged from its May report at a record 28 million tonnes.
This is up 1 million tonnes on its previous 2021-22 estimate.
But the 2020-21 production number was revised higher by 0.2 million tonnes to 27.2 million tonnes, based on more complete data from the Secretariat of Agriculture and Rural Development (SADER).
The planted area is up 2.2pc to 7.3 million hectares.
Harvest of this year's corn crop is ahead of average, with yields to date a bit better than expected - especially given the dry conditions in the Northern Plains this growing season.
As of October 8, about 41pc of the crop had been harvested - compared to 29pc at the same time last year, and a long-term average of 31 per cent.
The Mexican diet is heavily reliant on corn-based foods, such as tortillas.
Corn accounts for a significant proportion of the population's daily caloric intake, a custom that emerged thousands of years ago.
That is why corn is considered as much a food grain as it is a feed grain to Mexicans.
Domestic demand for corn is forecast at 44.2 million tonnes in 2021-22, which is an increase of 0.5 million tonnes compared to the previous corresponding period.
The food consumption component is unchanged at 18.2 million tonnes, or 41pc of total demand.
Feed demand makes up the balance at 26 million tonnes, which is up 0.5 million tonnes on the 2020-21 figure and matches the growth and bullish outlook for the stockfeed demand - particularly from the poultry sector.
This has pushed projected imports up to a new benchmark of 17 million tonnes, which is 3pc - or 0.5 million tonnes higher year-on-year.
This trend is expected to continue while production increases lag the demand curve.
Mexico held the mantle as the worlds biggest corn importer until usurped by China in the 2020-21 marketing year.
The current high priced commodity environment is great for the Mexican farmer.
But the increased reliance on imports makes food inflation a massive challenge for the government.
In September 2021 alone, the cost of food in Mexico increased by 8.8pc compared to September last year.
The price of tortillas is a significant economic barometer for the Mexican economy, and the high cost of imports has the government considering the relaxation of duties on imported corn.
Such a move would go a long way toward appeasing unrest amongst the general population as the economy struggles to recover from the COVID-19 downturn.
The story Mexican grain imports increasing, but so too is food inflation first appeared on The Land.