Sign up to save your podcasts
Or
Share From the Furrow – Luis Ribera – June 11, 2024
Share to email
Share to Facebook
Share to X
Share to email
Share to Facebook
Share to X
Or
From the Furrow – Luis Ribera – June 11, 2024
In our weekly series From the Furrow, host Mike McGinnis and fellow grain geeks shed light on current market conditions and how grain producers can take action to manage their risk.
This week, Mike is joined by Luis Ribiera, Professor, Extension Specialist and Director of the Center for North American Studies with Texas A&M University. How could policies by Mexico’s newly elected president impact US grain exports? What factors are driving fluctuations in the Mexican peso, and how might those movements affect the country’s demand for agricultural goods? Mike and Luis discuss those topics and a whole lot more.
Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].
Show Transcript
(Transcript auto-generated)
00;00;00;13 – 00;00;16;25
VOICEOVER
Futures trading involves risk and is not suitable for all investors. Content provided in the segment is not for educational purposes and is not a solicitation to buy or sell commodities. Opinions and statements of guests not affiliated with every egg of their own, and do not reflect the views of the brand. The accuracy of their statements can not be guaranteed by a Barack.
00;00;16;27 – 00;00;36;19
MIKE
Hello and welcome to From the Furrow, brought to you by Ever AG Insights. Each week we talk with subject matter experts on news and topics affecting the grain markets. I’m your host, Mike McGinnis, and we get started today on this Tuesday, June 11th, 2024, with a look at the markets. Today’s corn contract new crop anyway is trading $0.01 higher at 469.
00;00;36;20 – 00;01;03;01
MIKE
Meanwhile, July is also up slightly at 452. July soybeans down six and a half cents at 1181. New crop November down four and a quarter cents at 1154. Meanwhile, July wheat up eight and a half cents at 616. The July wheat contract is the leader today, as it has been for a while, but it has been trailing this past week with pressure coming from the weather hitting Russia’s wheat crop.
00;01;03;01 – 00;01;25;05
MIKE
Today we want to welcome our guest, Luis Rivera, Texas A&M Agrilife extension economist and the timing of his appearance on From The Furrow. Couldn’t be better. As we talk all things Mexico and the recent presidential election and the peso and other topics that are affecting the US interests with Mexico trade. So first off, we want to welcome Luis.
00;01;25;05 – 00;01;27;00
MIKE
Luis, thanks for joining us today. Sure.
00;01;27;00 – 00;01;27;24
LUIS
Thank you for having me.
00;01;27;24 – 00;01;45;06
MIKE
Let’s start right with the topic that came out a couple of weeks ago about some U.S. farmers along the Mexico border claiming that Mexico is withholding water rights from their land, and an agreement that was put in place years ago. I’m going to have you explain the agreement and the current situation.
00;01;45;09 – 00;02;12;10
LUIS
Sure. Well, that was the 1944 treaty, because the US and then Mexico, they share the waters of the Rio Grande and all the tributaries that feel that river come from Mexico. So the treaty basically established that how the waters are going to be shared. Mexico is supposed to deliver on a five year period, 1.75 million acre feet of water, which turns out to be around 350,000 acre feet of water per year.
00;02;12;10 – 00;02;37;21
LUIS
On a five year period. So for years you have worked fine until around the early 90s when NAFTA was being negotiated, and that changed Mexican agriculture quite a bit because there was the opportunity to send high value produce, fresh fruits and vegetables to the US. So they changed their production of of many of their crops from dry land to irrigated crops.
00;02;37;21 – 00;02;54;20
LUIS
So because of that change, then they’re starting to using a lot more water. And there was no issues for 1944 to the early 90s until it happens in the early 90s, and it has gotten worse over the years. Now looks like every other year there’s an issue with the waters of Mexico.
00;02;54;20 – 00;03;02;11
MIKE
So it’s more about the change in what Mexico is growing and not really about the drought that’s really hit Mexico hard this year.
00;03;02;11 – 00;03;27;23
LUIS
Well, if you change your agricultural production from just dryland crops to high value irrigated crops, you’re going to use more water. The drought doesn’t help. And that’s what I’ve been talking to. Producers on the US side is not that Mexico just recently turned to be a bad neighbor to the US? That’s one of the liberal worries that they’re using a lot more water, and the drought is also adding more constraint to the availability of that from the USA.
00;03;27;23 – 00;03;47;03
LUIS
The issue is that, okay, you know, we understand both sides. We’re facing drought, but at the same time we have this treaty and we need to abide by it because it’s a five year period. Again, you know, 1.75 million acre feet of water right now. The period started in 21 and is going to end in 25. Well, Mexico all more than three years worth of water.
00;03;47;03 – 00;04;03;24
LUIS
So they over a million acre feet of water. And the reason is again, you know, they’re using a lot of water. But the way that the treaties said is that it’s in a five year period, will Mexico see that they have five years to send 1.75 million acre feet of water? Well, the US producer says he didn’t know.
00;04;03;24 – 00;04;26;24
LUIS
We don’t need all in one year. We wanted 350 on a yearly basis because we need to grow our crops. So that’s the issue that you see right now is that Mexico saying that we’re complying by and also we don’t have extra water. Will the USA saying, well, you know, it doesn’t make any sense to get all the water in one year and nothing on the other four years, you know, so that’s the main issue right now.
00;04;26;27 – 00;04;33;20
MIKE
Okay. And how does it get settled. Do you think the farmers are going to have to understand the situation with how Mexico’s using the water?
00;04;33;20 – 00;04;53;02
LUIS
Well, I think that’s where it becomes a little more political. Mexico is benefited from this, you know, treaty. And they want to keep supplying fresh produce to the US. You know, the US benefits for having, you know, these fresh produce year round, good quality and good prices. But at the same time is hurting producers on the US side.
00;04;53;02 – 00;05;13;09
LUIS
So somehow they need to sit down and say, how can we solve together this issue? And the bottom line is that is not working the way that it used to is a different reality. We need to update this treaty in a way that we can have more of a win win situation versus close as a win win situation, because right now is very Lupe cited for the Mexican side.
00;05;13;09 – 00;05;22;26
LUIS
And producers in South Texas are really damaged. I don’t know if you saw in the news, but the only sugar mill in Texas, it got shut down because of lack of water.
00;05;22;29 – 00;05;45;15
MIKE
Well, when they do sit down, there’s going to be someone new at the table because Mexico just elected president Claudia Sheinbaum, the first woman ever to hold that office. As I understand it, a handpicked successor to the populist outgoing president Andre Manuel Lopez Obrador, better known as Amlo. Now, will president shine bomb shake up the Usmca trade agreement, Louis, or do you see her leaving it as is?
00;05;45;15 – 00;06;09;06
LUIS
Well, let me just tackle that question. From an economist point of view. Yes, looking at data, politicians are going to do politics, but hopefully they look at the data so they can decide what to do. But when you look at this data, in fact, when you look at both NAFTA and Usmca, the main objectives of NAFTA and now Usmca was to increase trade among countries.
00;06;09;07 – 00;06;43;02
LUIS
And when the three countries reduce tariffs and reduce any non-tariff barriers like sanitary and to sanitary issues, for example, try to make it more homogeneous across the border so we can trade more freely. When you look at those objectives, both agreements, they’re being really good, maybe severe comply. They’ve successfully fulfilled those objectives. So looking at that I can say yes, he’s been successful and he’s being positive because we trade more than ever before and countries benefit from the different comparative and competitive advantages.
00;06;43;02 – 00;07;06;28
LUIS
We import quite a bit of fruits and vegetables for Mexico. They have comparative and competitive advantages over there where there is better lower labor costs, and we benefit as a us because we send a lot more grace to Mexico. We send a little lower corn, soybeans, sorghum. So in that sense it’s been very, very positive. Of course, there’s going to be some areas that are going to be affected.
00;07;06;28 – 00;07;24;28
LUIS
Fruit and vegetable producers in the US have to compete more with Mexico. But the same thing, you know, corn producers in Mexico, they have to compete with the US producer. There’s going to be winners or losers. But when you look at the overall and the macro level is been very positive for all three countries, and as a consumer, we all are consumers.
00;07;24;28 – 00;07;48;00
LUIS
We benefit because we have a good source of food year round, high quality at a relatively low cost. I always remind my audience that we have in here in the US, we have the most affordable food in the world, and when you put it as a percentage of our income, we spend about 6.6 6.7% of our disposable income on food eating at home.
00;07;48;00 – 00;08;14;09
LUIS
And that is the most affordable, the cheapest one on the whole world. When you look at other powerhouses like Brazil, for example, they spend about 1,819% of their income on food. And when you look at, I say Nigeria for example, they spend about 60, 65% of what it’s supposed to link or food. So here we have a really good because we’re good at producing what we produce and we export the rest and what we cannot produce year round or we cannot produce are all like bananas.
00;08;14;09 – 00;08;18;14
LUIS
For example, we import in US consumers as a country. We benefit from.
00;08;18;14 – 00;08;41;06
MIKE
That. Well, that’s a stat that’s not appreciated enough, that’s for sure. How will newly elected President Sheinbaum handle Mexico’s proposal to limit imports of GMO corn? I understand that she has an environmentalist bent in her perspective of things. Do you think that this issue will get resolved, as it’s been reported to be resolved around the fall timeframe? Or how do you see this going?
00;08;41;06 – 00;09;02;28
LUIS
Well, again, you know, I’m going to try to separate politics from data, from facts. And when you look at the main producers of corn in the world, they all produce GMO corn. So if they’re going to ban GMO corn, the first questions are where are they going to get it from? And then after you somehow figure out where, at what cost, you know, and how reliable the sources are going to be.
00;09;02;28 – 00;09;23;19
LUIS
So I don’t see that happening, I think is more like a political standing. But when you look at data, it doesn’t hold any ground because again, you’re not going to find a supplier of non-GMO corn and you find it is not going to be enough. And even if they have enough, you know, it’s going to be extremely more expensive than what we have right now.
00;09;23;19 – 00;09;50;04
LUIS
You have to understand that Mexico depend on the US corn a lot. And also, of course, we depend on that market as well. But just yes, give you an example. Mexico used to import a lot of our a lot of beef from the US. So we’re a big producer of beef and we export beef. But what Mexico did is that they hey, you know, what we can do is that we going to import, take advantage of the cheap corn from the US and we’re going to finish our cattle here in Mexico.
00;09;50;04 – 00;10;11;20
LUIS
That’s what you have a lot of feedstock on the US-Mexico border taking advantage of lower regulations and also cheaper labor. So instead of sending their 500 pound cap to the US to be finished with us corn, they keep it in Mexico, they import the corn from the US, they finish and harvest cattle in Mexico and then shipped beef to the US.
00;10;11;20 – 00;10;20;15
LUIS
And now we import more beef from Mexico that we export to Mexico. So those are the benefits that you see. Those synergies work for both countries.
00;10;20;19 – 00;10;44;10
MIKE
I might add that US soybeans also are going to Mexico for the same reasons for food and feed. And right now, U.S. soybeans have the largest market share at 88% of the total imported beans from Mexico. So it is a huge market. Which leads me to my next question. And that is the Mexican peso. Now, because of what we just talked about, the pesos value has impact on agricultural trade with the United States.
00;10;44;10 – 00;10;55;05
MIKE
Recently, the Mexico peso has been weakening since the presidential election. Now, will that continue? Louis? Or how do you see the pace or the pattern of the peso going against the US dollar?
00;10;55;05 – 00;11;16;12
LUIS
Well, there’s a lot of variables going into there. It’s again, you know, in free markets you’re going to have supply in demand and you’re going to have political changes. My understanding is that the new president in Mexico is from the same political party as Amlo. So it looks like they’re actually going to try to intervene the markets a lot more in the markets reacts to that.
00;11;16;12 – 00;11;35;07
LUIS
So again, you know, when you look at trade status, I guess among the countries it looks pretty good. But when you start changing things around that the markets are going to react to that. It’s like let’s say Mexico decides to move into the corn, even if they don’t move into reducing the imports of GMO, the markets are going to react, the prices are going to react.
00;11;35;07 – 00;11;55;25
LUIS
And remember that the exchange rate is also priced between the two currencies. So I really don’t know how it’s going to play out. I just think that because the US dollar is such a strong currency and we have inflation all over the world, one of the properties I guess of currency is to read whole value. You know, you have currency so you can store value.
00;11;55;25 – 00;12;19;21
LUIS
And because the US is such a strong economy, if you want to fight inflation, you will put your resources, I guess, into a currency that can hold value. The US is one to do so. The strength of the US dollar, not necessarily something that Mexico is doing, is yes, the worldwide inflation is still an issue and half of the US dollars for the quantity of US dollars are outside of the US.
00;12;19;21 – 00;12;39;26
LUIS
So for example, in Argentina that they have to fight inflation rate inflation, hyperinflation. The US dollar is a storage of value. So they try to keep it there. And when you keep it there it makes your dollars again. You know why in the man you want to put your assets, I guess, into a currency that holds against other ones and is stronger than the euro.
00;12;39;26 – 00;12;48;25
LUIS
The euro is also going through some other issues, and of course, you know, is much stronger on the peso as well. I don’t see that as necessarily as a positive negative. It’s just a reality.
00;12;48;27 – 00;13;11;00
MIKE
Well, Mexico is a huge partner obviously, and US ag industry is very concerned about the peso and the volatility in Mexico. And I’m sure that everyone will be continue to watch the situation there, not just the peso, but also how things play out with the newly elected president. But Luis, thank you very much for your perspective, and thank you for taking time today to join us here on from the for.
00;13;11;01 – 00;13;13;08
LUIS
Sure, anytime. And thank you for having me.
00;13;13;08 – 00;13;29;14
MIKE
Thank you. And we do appreciate it. Luis Ribeiro, Texas A&M Agrilife extension economist with us here. Thank you for joining us today. If you’ve enjoyed listening to From the Furrow, be sure to tell a friend or to and subscribe to us wherever you listen to your podcast. Thank you to the Ever AG Insights Crew for their work on today’s show.
Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.
EVER.AG INSURANCE SERVICES IS A LICENSED INSURANCE AGENCY AND AN AFFILIATE OF EVER.AG. INFORMATION CONTAINED HEREIN IN THIS WEBSITE IS COMPILED FOR THE CONVENIENCE OF THE USER. INFORMATION IS OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE AND IS FURNISHED WITHOUT RESPONSIBILITY FOR ACCURACY OR CONTENT. MARKET DATA IS SUBJECT TO CHANGE AT ANY TIME. Ever.Ag is a licensed insurance agency in the following states: AZ, CA, CO, CT, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MO, MT, NE, NV, NH, NM, NY, NC, ND, OK, OH, OR, PA, RI, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY.
—
The following music was used for this media project:
Music: Funky Intro 29 by TaigaSoundProd
Free download: https://filmmusic.io/song/9520-funky-intro-29
License (CC BY 4.0): https://filmmusic.io/standard-license
Artist website: https://linktr.ee/taigasoundprod
© Ever.Ag 2023, confidential and proprietary.
The post From the Furrow – Luis Ribera – June 11, 2024 appeared first on .
View all episodes
By Ever.Ag
5
55 ratings
In our weekly series From the Furrow, host Mike McGinnis and fellow grain geeks shed light on current market conditions and how grain producers can take action to manage their risk.
This week, Mike is joined by Luis Ribiera, Professor, Extension Specialist and Director of the Center for North American Studies with Texas A&M University. How could policies by Mexico’s newly elected president impact US grain exports? What factors are driving fluctuations in the Mexican peso, and how might those movements affect the country’s demand for agricultural goods? Mike and Luis discuss those topics and a whole lot more.
Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].
Show Transcript
(Transcript auto-generated)
00;00;00;13 – 00;00;16;25
VOICEOVER
Futures trading involves risk and is not suitable for all investors. Content provided in the segment is not for educational purposes and is not a solicitation to buy or sell commodities. Opinions and statements of guests not affiliated with every egg of their own, and do not reflect the views of the brand. The accuracy of their statements can not be guaranteed by a Barack.
00;00;16;27 – 00;00;36;19
MIKE
Hello and welcome to From the Furrow, brought to you by Ever AG Insights. Each week we talk with subject matter experts on news and topics affecting the grain markets. I’m your host, Mike McGinnis, and we get started today on this Tuesday, June 11th, 2024, with a look at the markets. Today’s corn contract new crop anyway is trading $0.01 higher at 469.
00;00;36;20 – 00;01;03;01
MIKE
Meanwhile, July is also up slightly at 452. July soybeans down six and a half cents at 1181. New crop November down four and a quarter cents at 1154. Meanwhile, July wheat up eight and a half cents at 616. The July wheat contract is the leader today, as it has been for a while, but it has been trailing this past week with pressure coming from the weather hitting Russia’s wheat crop.
00;01;03;01 – 00;01;25;05
MIKE
Today we want to welcome our guest, Luis Rivera, Texas A&M Agrilife extension economist and the timing of his appearance on From The Furrow. Couldn’t be better. As we talk all things Mexico and the recent presidential election and the peso and other topics that are affecting the US interests with Mexico trade. So first off, we want to welcome Luis.
00;01;25;05 – 00;01;27;00
MIKE
Luis, thanks for joining us today. Sure.
00;01;27;00 – 00;01;27;24
LUIS
Thank you for having me.
00;01;27;24 – 00;01;45;06
MIKE
Let’s start right with the topic that came out a couple of weeks ago about some U.S. farmers along the Mexico border claiming that Mexico is withholding water rights from their land, and an agreement that was put in place years ago. I’m going to have you explain the agreement and the current situation.
00;01;45;09 – 00;02;12;10
LUIS
Sure. Well, that was the 1944 treaty, because the US and then Mexico, they share the waters of the Rio Grande and all the tributaries that feel that river come from Mexico. So the treaty basically established that how the waters are going to be shared. Mexico is supposed to deliver on a five year period, 1.75 million acre feet of water, which turns out to be around 350,000 acre feet of water per year.
00;02;12;10 – 00;02;37;21
LUIS
On a five year period. So for years you have worked fine until around the early 90s when NAFTA was being negotiated, and that changed Mexican agriculture quite a bit because there was the opportunity to send high value produce, fresh fruits and vegetables to the US. So they changed their production of of many of their crops from dry land to irrigated crops.
00;02;37;21 – 00;02;54;20
LUIS
So because of that change, then they’re starting to using a lot more water. And there was no issues for 1944 to the early 90s until it happens in the early 90s, and it has gotten worse over the years. Now looks like every other year there’s an issue with the waters of Mexico.
00;02;54;20 – 00;03;02;11
MIKE
So it’s more about the change in what Mexico is growing and not really about the drought that’s really hit Mexico hard this year.
00;03;02;11 – 00;03;27;23
LUIS
Well, if you change your agricultural production from just dryland crops to high value irrigated crops, you’re going to use more water. The drought doesn’t help. And that’s what I’ve been talking to. Producers on the US side is not that Mexico just recently turned to be a bad neighbor to the US? That’s one of the liberal worries that they’re using a lot more water, and the drought is also adding more constraint to the availability of that from the USA.
00;03;27;23 – 00;03;47;03
LUIS
The issue is that, okay, you know, we understand both sides. We’re facing drought, but at the same time we have this treaty and we need to abide by it because it’s a five year period. Again, you know, 1.75 million acre feet of water right now. The period started in 21 and is going to end in 25. Well, Mexico all more than three years worth of water.
00;03;47;03 – 00;04;03;24
LUIS
So they over a million acre feet of water. And the reason is again, you know, they’re using a lot of water. But the way that the treaties said is that it’s in a five year period, will Mexico see that they have five years to send 1.75 million acre feet of water? Well, the US producer says he didn’t know.
00;04;03;24 – 00;04;26;24
LUIS
We don’t need all in one year. We wanted 350 on a yearly basis because we need to grow our crops. So that’s the issue that you see right now is that Mexico saying that we’re complying by and also we don’t have extra water. Will the USA saying, well, you know, it doesn’t make any sense to get all the water in one year and nothing on the other four years, you know, so that’s the main issue right now.
00;04;26;27 – 00;04;33;20
MIKE
Okay. And how does it get settled. Do you think the farmers are going to have to understand the situation with how Mexico’s using the water?
00;04;33;20 – 00;04;53;02
LUIS
Well, I think that’s where it becomes a little more political. Mexico is benefited from this, you know, treaty. And they want to keep supplying fresh produce to the US. You know, the US benefits for having, you know, these fresh produce year round, good quality and good prices. But at the same time is hurting producers on the US side.
00;04;53;02 – 00;05;13;09
LUIS
So somehow they need to sit down and say, how can we solve together this issue? And the bottom line is that is not working the way that it used to is a different reality. We need to update this treaty in a way that we can have more of a win win situation versus close as a win win situation, because right now is very Lupe cited for the Mexican side.
00;05;13;09 – 00;05;22;26
LUIS
And producers in South Texas are really damaged. I don’t know if you saw in the news, but the only sugar mill in Texas, it got shut down because of lack of water.
00;05;22;29 – 00;05;45;15
MIKE
Well, when they do sit down, there’s going to be someone new at the table because Mexico just elected president Claudia Sheinbaum, the first woman ever to hold that office. As I understand it, a handpicked successor to the populist outgoing president Andre Manuel Lopez Obrador, better known as Amlo. Now, will president shine bomb shake up the Usmca trade agreement, Louis, or do you see her leaving it as is?
00;05;45;15 – 00;06;09;06
LUIS
Well, let me just tackle that question. From an economist point of view. Yes, looking at data, politicians are going to do politics, but hopefully they look at the data so they can decide what to do. But when you look at this data, in fact, when you look at both NAFTA and Usmca, the main objectives of NAFTA and now Usmca was to increase trade among countries.
00;06;09;07 – 00;06;43;02
LUIS
And when the three countries reduce tariffs and reduce any non-tariff barriers like sanitary and to sanitary issues, for example, try to make it more homogeneous across the border so we can trade more freely. When you look at those objectives, both agreements, they’re being really good, maybe severe comply. They’ve successfully fulfilled those objectives. So looking at that I can say yes, he’s been successful and he’s being positive because we trade more than ever before and countries benefit from the different comparative and competitive advantages.
00;06;43;02 – 00;07;06;28
LUIS
We import quite a bit of fruits and vegetables for Mexico. They have comparative and competitive advantages over there where there is better lower labor costs, and we benefit as a us because we send a lot more grace to Mexico. We send a little lower corn, soybeans, sorghum. So in that sense it’s been very, very positive. Of course, there’s going to be some areas that are going to be affected.
00;07;06;28 – 00;07;24;28
LUIS
Fruit and vegetable producers in the US have to compete more with Mexico. But the same thing, you know, corn producers in Mexico, they have to compete with the US producer. There’s going to be winners or losers. But when you look at the overall and the macro level is been very positive for all three countries, and as a consumer, we all are consumers.
00;07;24;28 – 00;07;48;00
LUIS
We benefit because we have a good source of food year round, high quality at a relatively low cost. I always remind my audience that we have in here in the US, we have the most affordable food in the world, and when you put it as a percentage of our income, we spend about 6.6 6.7% of our disposable income on food eating at home.
00;07;48;00 – 00;08;14;09
LUIS
And that is the most affordable, the cheapest one on the whole world. When you look at other powerhouses like Brazil, for example, they spend about 1,819% of their income on food. And when you look at, I say Nigeria for example, they spend about 60, 65% of what it’s supposed to link or food. So here we have a really good because we’re good at producing what we produce and we export the rest and what we cannot produce year round or we cannot produce are all like bananas.
00;08;14;09 – 00;08;18;14
LUIS
For example, we import in US consumers as a country. We benefit from.
00;08;18;14 – 00;08;41;06
MIKE
That. Well, that’s a stat that’s not appreciated enough, that’s for sure. How will newly elected President Sheinbaum handle Mexico’s proposal to limit imports of GMO corn? I understand that she has an environmentalist bent in her perspective of things. Do you think that this issue will get resolved, as it’s been reported to be resolved around the fall timeframe? Or how do you see this going?
00;08;41;06 – 00;09;02;28
LUIS
Well, again, you know, I’m going to try to separate politics from data, from facts. And when you look at the main producers of corn in the world, they all produce GMO corn. So if they’re going to ban GMO corn, the first questions are where are they going to get it from? And then after you somehow figure out where, at what cost, you know, and how reliable the sources are going to be.
00;09;02;28 – 00;09;23;19
LUIS
So I don’t see that happening, I think is more like a political standing. But when you look at data, it doesn’t hold any ground because again, you’re not going to find a supplier of non-GMO corn and you find it is not going to be enough. And even if they have enough, you know, it’s going to be extremely more expensive than what we have right now.
00;09;23;19 – 00;09;50;04
LUIS
You have to understand that Mexico depend on the US corn a lot. And also, of course, we depend on that market as well. But just yes, give you an example. Mexico used to import a lot of our a lot of beef from the US. So we’re a big producer of beef and we export beef. But what Mexico did is that they hey, you know, what we can do is that we going to import, take advantage of the cheap corn from the US and we’re going to finish our cattle here in Mexico.
00;09;50;04 – 00;10;11;20
LUIS
That’s what you have a lot of feedstock on the US-Mexico border taking advantage of lower regulations and also cheaper labor. So instead of sending their 500 pound cap to the US to be finished with us corn, they keep it in Mexico, they import the corn from the US, they finish and harvest cattle in Mexico and then shipped beef to the US.
00;10;11;20 – 00;10;20;15
LUIS
And now we import more beef from Mexico that we export to Mexico. So those are the benefits that you see. Those synergies work for both countries.
00;10;20;19 – 00;10;44;10
MIKE
I might add that US soybeans also are going to Mexico for the same reasons for food and feed. And right now, U.S. soybeans have the largest market share at 88% of the total imported beans from Mexico. So it is a huge market. Which leads me to my next question. And that is the Mexican peso. Now, because of what we just talked about, the pesos value has impact on agricultural trade with the United States.
00;10;44;10 – 00;10;55;05
MIKE
Recently, the Mexico peso has been weakening since the presidential election. Now, will that continue? Louis? Or how do you see the pace or the pattern of the peso going against the US dollar?
00;10;55;05 – 00;11;16;12
LUIS
Well, there’s a lot of variables going into there. It’s again, you know, in free markets you’re going to have supply in demand and you’re going to have political changes. My understanding is that the new president in Mexico is from the same political party as Amlo. So it looks like they’re actually going to try to intervene the markets a lot more in the markets reacts to that.
00;11;16;12 – 00;11;35;07
LUIS
So again, you know, when you look at trade status, I guess among the countries it looks pretty good. But when you start changing things around that the markets are going to react to that. It’s like let’s say Mexico decides to move into the corn, even if they don’t move into reducing the imports of GMO, the markets are going to react, the prices are going to react.
00;11;35;07 – 00;11;55;25
LUIS
And remember that the exchange rate is also priced between the two currencies. So I really don’t know how it’s going to play out. I just think that because the US dollar is such a strong currency and we have inflation all over the world, one of the properties I guess of currency is to read whole value. You know, you have currency so you can store value.
00;11;55;25 – 00;12;19;21
LUIS
And because the US is such a strong economy, if you want to fight inflation, you will put your resources, I guess, into a currency that can hold value. The US is one to do so. The strength of the US dollar, not necessarily something that Mexico is doing, is yes, the worldwide inflation is still an issue and half of the US dollars for the quantity of US dollars are outside of the US.
00;12;19;21 – 00;12;39;26
LUIS
So for example, in Argentina that they have to fight inflation rate inflation, hyperinflation. The US dollar is a storage of value. So they try to keep it there. And when you keep it there it makes your dollars again. You know why in the man you want to put your assets, I guess, into a currency that holds against other ones and is stronger than the euro.
00;12;39;26 – 00;12;48;25
LUIS
The euro is also going through some other issues, and of course, you know, is much stronger on the peso as well. I don’t see that as necessarily as a positive negative. It’s just a reality.
00;12;48;27 – 00;13;11;00
MIKE
Well, Mexico is a huge partner obviously, and US ag industry is very concerned about the peso and the volatility in Mexico. And I’m sure that everyone will be continue to watch the situation there, not just the peso, but also how things play out with the newly elected president. But Luis, thank you very much for your perspective, and thank you for taking time today to join us here on from the for.
00;13;11;01 – 00;13;13;08
LUIS
Sure, anytime. And thank you for having me.
00;13;13;08 – 00;13;29;14
MIKE
Thank you. And we do appreciate it. Luis Ribeiro, Texas A&M Agrilife extension economist with us here. Thank you for joining us today. If you’ve enjoyed listening to From the Furrow, be sure to tell a friend or to and subscribe to us wherever you listen to your podcast. Thank you to the Ever AG Insights Crew for their work on today’s show.
Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.
EVER.AG INSURANCE SERVICES IS A LICENSED INSURANCE AGENCY AND AN AFFILIATE OF EVER.AG. INFORMATION CONTAINED HEREIN IN THIS WEBSITE IS COMPILED FOR THE CONVENIENCE OF THE USER. INFORMATION IS OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE AND IS FURNISHED WITHOUT RESPONSIBILITY FOR ACCURACY OR CONTENT. MARKET DATA IS SUBJECT TO CHANGE AT ANY TIME. Ever.Ag is a licensed insurance agency in the following states: AZ, CA, CO, CT, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MO, MT, NE, NV, NH, NM, NY, NC, ND, OK, OH, OR, PA, RI, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY.
—
The following music was used for this media project:
Music: Funky Intro 29 by TaigaSoundProd
Free download: https://filmmusic.io/song/9520-funky-intro-29
License (CC BY 4.0): https://filmmusic.io/standard-license
Artist website: https://linktr.ee/taigasoundprod
© Ever.Ag 2023, confidential and proprietary.
The post From the Furrow – Luis Ribera – June 11, 2024 appeared first on .
More shows like The Ever.Ag Podcast
View all
The Ramsey Show
39,013 Listeners
The EntreLeadership Podcast
4,394 Listeners
AgriTalk
152 Listeners
AgriTalk PM
132 Listeners
The Dividend Cafe
582 Listeners
The Business of Agriculture Podcast
122 Listeners
The Milk Check
21 Listeners
Progressive Dairy Podcast
19 Listeners
Dairy Defined
4 Listeners
Grain Markets and Other Stuff
342 Listeners
All-In with Chamath, Jason, Sacks & Friedberg
9,852 Listeners
Let's Chat Dairy
16 Listeners
The Dairy Download
27 Listeners
Barn Talk
1,649 Listeners
Dairy Insights: Heard Mentality
8 Listeners