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Puerto Vallarta News NetworkNews Around the Republic of Mexico 

First Signs of U.S. - Mexico Trade Trouble Surface

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June 28, 2017

Early feedback indicates a slowing of exports may be the result of faltering trust between trading partners on both sides of the border, uncertainties over faltering trade relations clouding the future.

Clarksdale, Mississippi - Ever since presidential candidate Donald Trump called the North American Free Trade Agreement "the worst deal ever" during multiple campaign speeches, U.S. agriculture producers and support groups have been concerned that potential changes in the current trade agreement with Mexico and Canada could represent a significant threat to their farm and ranch operations.

Farmers are being told that the NAFTA renegotiation will be a positive development. A number of Congressional lawmakers, newly appointed Agriculture Secretary Sonny Perdue, and U.S. Secretary of Commerce Wilbur Ross all argued renegotiation efforts for NAFTA would leave farmers with a more modern and trustworthy agreement.

But early feedback indicates a slowing of exports so far this year may be the result of faltering trust between trading partners on both sides of the border, uncertainties over faltering trade relations clouding the future.

Take a look at the numbers.

For the first time in four years, in the first four months of the year U.S. exports of soybean meal used to feed Mexican livestock and poultry has fallen by 15 percent. And U.S. chicken meat exports to Mexico dropped 11-percent over the same period, the biggest decline since 2003. U.S. corn exports have also dropped, by an unexpected 6-percent. As most farmers can tell you, Mexico is the largest international buyer of U.S. corn, soybeans and poultry, the very foundation of agriculture trade headed across the border.

The Wall Street Journal largely attributes this decline in exports to what they term the growing unease of Mexican buyers who fear that renegotiation of NAFTA will not take place without complications. The Journal article illustrates how many Mexican companies are turning to other suppliers, like Brazil, for replacements to U.S. agricultural products in the short term, at least until after NAFTA renegotiation efforts prove to be either a true success or a terrible failure.

What may be more surprising is that these same buyers in Mexico are paying more for the same product they were buying from U.S. exporters, knowing full well it was costing them more money. A spokesman for the Mexico livestock industry called paying a higher prices for Brazilian corn "an investment" in the event a trade disagreement with the U.S. becomes a stumbling block during NAFTA meetings.

If Mexico's trend to buy food and other agricultural products from other sellers continues in the months ahead, it could have a major effect not only on prices of U.S. goods, but stocks as well. As corn or soybeans that were grown for the Mexican market accumulate in U.S. storage facilities after this growing season, analysts warn the world market could get flooded with low cost corn and beans, forcing prices even lower.

Analysts say Mexico's recent purchase of South American corn meal probably represent an emerging strategy by Mexican trade officials who are intent on sending a clear message to the Trump administration: "Mexico is not going to roll over" on trade disputes.

Get the full story on DeltaFarmPress.com.