USDBC MEXICO MONTHLY REPORT JUNE – JULY...

Mercalimentos Consultores S.C. In Market Representatives 52+55 5362-7407, Fax. 53626724 Ailes 2 Chabacanos 4, Las Huertas, Atizapan de Zaragoza, Estado de México [email protected]

USDBC MEXICO MONTHLY REPORT JUNE – JULY 2015

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USDBC Mexico March 2015 Report 1

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2015 SPRING-SUMMER OFFICIAL DRY BEAN PLANTING SEASON REPORT

SITUATION UNTIL JUNE 30, 2015

programmed planted harvested damaged programmed obtained programmed obtained

AGUASCALIENTES 9,302 2,216 5,967 0.641BAJA CALIFORNIA 536 434 0.81BAJA CALIFORNIA SUR 1,248 657 8 1,375 10 1.102 1.281CAMPECHE 76 67 0.882COAHUILA 5,448 1,312 3,610 0.663CHIAPAS 74,055 43,352 44,725 0.604CHIHUAHUA 133,013 8,437 127,347 0.957DISTRITO FEDERAL 108 107 105 0.972DURANGO 254,676 314 191,333 0.751GUANAJUATO 89,209 35,472 126 25 62,130 276 0.696 2.193GUERRERO 11,011 2,807 8,285 0.752HIDALGO 33,030 25,099 105 25,659 140 0.777 1.338JALISCO 12,092 1,854 11,174 0.924MEXICO 7,500 4,827 7,079 0.944MICHOACAN 4,717 2,377 5,905 1.252MORELOS 1,168 772 1,228 1.051NAYARIT 185 225 1.215NUEVO LEON 2,847 1,050 2,765 0.971OAXACA 34,391 18,679 23,035 0.67PUEBLA 65,989 44,776 118 5 78,208 64 1.185 0.54QUERETARO 11,930 7,168 6,992 0.586QUINTANA ROO 40 34 36 0.9SAN LUIS POTOSI 115,626 30,899 8 76,116 0.658SINALOA 562 5 253 0.45SONORA 2,680 1,451 1,341 4,263 2,749 1.59 2.05TABASCO 87 35 64 0.736TAMAULIPAS 5,497 5,074 0.923TLAXCALA 4,711 4,071 4,213 0.894VERACRUZ 14,145 4,750 8,042 0.569YUCATAN 24 16 0.637ZACATECAS 608,288 45,720 356 312,737 0.514

TOTAL 1,504,192 288,243 1,698 394 1,018,462 3,240 0.677 1.908Preliminary dataSource: SIAP-SAGARPA

State Surface (HA) Production (MT/HA) Yield (MT/HA)

2015 SPRING-SUMMER CYCLE MEXICO DRY BEAN PLANTING REPORTIRRIGATED + DRYLAND

Comments on the 2015 Spring-Summer Bean Planting Season Zacatecas.- Raining season arrived on time and producers finished planting the almost 30 thousand hectares of irrigated colored beans and although planting season started on June 20th, producers are trying to resume the general planting of the dry land beans in all of the state, however, the frequent rainfall has delayed the labor. They received a strong storm in the Guadalupe region (close to the capital of the state) damaging a small number of irrigated beans. The State Department of Agriculture continue promoting and enforcing the crop conversion program trying to reduce the dry bean hectares as much as possible closer to 500 thousand, with a higher percentage of black beans. However official planting intentions remain 579 thousand hectares. As reported last month, they are offering seed to plant barley for the beer industry, oats, wheat and sunflower for oil in the crop conversion program.



Mercalimentos Consultores S.C. In Market Representatives 52+55 5362-7407, Fax. 53626724 Ailes 2 Chabacanos 4, Las Huertas, Atizapan de Zaragoza, Estado de México [email protected] Durango.- Rainfall in Durango has also been favorable, however they are also about to generalize the planting of the programmed 254 thousand hectares in the state. The State’s Department of Agriculture is also implementing the crop conversion program to more profitable crops and until now they are securing 40 thousand bean hectares to be planted with oats and some sunflower contracted. We will continue following up and reporting as more information becomes available. Chihuahua.- Also being favored by the raining season in a lower scale vs. Zacatecas and Durango, nevertheless, they have only planted half of the programmed 29 thousand hectares of irrigated beans and have not started yet with the programmed 117 thousand hectares of dry land beans. San Luis Potosi and Guanajuato.- Have started to plant their colored beans. Guanajuato has more progress with almost 50 percent of the planting and San Luis is only about 20 percent. Just as a reminder, this is what it looked like at the end of season in 2014, when weather was favorable for beans in Mexico:

2014 SS PLANTING AND PRODUCTION END OF PLANTING SEASON EXPECTATIONS STATE PLANTED (ha) PRODUCTION (MT) YIELD (MT/HA)

Zacatecas 595,534 399,007 0.67Durango 250,100 170,068 0.68Chihuahua 121,010 92,330 0.68Guanajuato 80,856 61,531 0.761San Luis Potosi 135,433 90,740 0.67SUBTOTAL 1, 182,933 813,676 0.687Other 279,748 195,824 0.7TOTAL 1,462,681 1,009,500 690

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. Comments from the Industry: Industry members commented that the market remains very calmed and bean inventories are enough in the country. They know that quota permits to import beans from China or Argentina are most likely to be cancelled this year again, since there is no need for these until now. Commented that Mexican crop looks positive given the timely raining season. However Zacatecas has not been able to plant as of yet although they still have couple of weeks more to do it. The multi-annual unilateral dry bean quota permits for imports outside NAFTA for up to 100 thousand MT, as mentioned before, were not announced in June and it is expected that these will not even be announced this year as bean inventories are reportedly enough to cover the demand, complementing with NAFTA imports. We will continue following up and reporting to make sure this QUOTA is not announced sometime this year.




Wholesale and Semi-wholesale Prices Report

MONTH: June 2015

MONTHLY CENTRAL MARKET WHOLESALE PRICES REPORT

PRODUCT product VAR VAR VAR VARVARIETY origin PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) %

(state/country) current before current before current before current before 06 30 15 05 30 15 06 30 15 05 30 15 06 30 15 05 30 15 06 30 15 05 30 15

BEANSImported Black Imported 19.00 19.00 0.00% 19.00 19.50 -2.56% 19.00 19.00 0.00%Jamapa Black Zacatecas Nayarit Black NAY. 15.50 13.50 14.81%Bola Black ZAC. 13.50 13.50 0.00% 13.50 13.00 3.85%Veracruz Black VER. 14.50 14.50 0.00%Imported Pinto Imported 13.50 13.50 0.00% 15.00 17.25 -13.04%Pinto Saltillo ZAC. Pinto Saltillo NAY. 10.50Pinto Saltillo CHIH. 11.00 11.20 -1.79% 10.20 11.00 -7.27% 10.00 10.00Pinto Saltillo DGO. 0.00Small Alubia Imported 18.50 18.50 0.00 22.00 22.00 0.00% 18.00 18.00 0.00%Large Alubia Imported 11.00 12.00 -0.08 22.00 22.00 0.00% 14.00 14.00 0.00%Flor de Junio ZAC. 17.00 17.00 14.50 13.63 6.38%Flor de Mayo ZAC 15.00 15.00 0.00% 14.50 13.50 7.41%Bayo Berrendo JAL. 20.50 22.00 -6.82%Bayo ZAC. 13.00 13.00 0.00% 10.50 10.00 5.00%Garbancillo ZAC 13.50 13.50 0.00% 16.00 16.00 0.00%Canario SIN. 10.75 11.50 -6.52%Cacahuate Bola GRO. Garbancillo zarco JAL. 19.00Azufrado SIN. 17.00 17.00 0.00%Mayocoba SIN. 20.00 20.00 0.00% 17.50 16.00 9.38%Peruano SIN. 23.00 22.00 4.55% 22.00 23.00 -4.35% 27.00 20.00 35.00% 17.50 16.00 9.38%

PRODUCT product VAR VAR VAR VARVARIETY origin PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) % PRICE ($/KG) %

(state/country) current before current before current before current before 06 30 15 05 30 15 06 30 15 05 30 15 06 30 15 05 30 15 06 30 15 05 30 15

BEANSImported Black USA Jamapa Black Zacatecas 10.50 8.50 23.53%Nayarit Black NAY. 19.00 18.00 5.56%Bola Black ZAC. 11.00 11.00 0.00% 14.00 14.00 0.00%Veracruz Black VER.Imported Pinto USA Pinto Saltillo ZAC. 12.00 10.00 20.00% 14.00 14.00 0.00%Pinto Saltillo JAL. 12.00 9.00 33.33%Pinto Saltillo CHIH. 9.75 9.75 0.00%Pinto Saltillo DGO. 11.00 10.50 4.76%Small Alubia Imported 20.00 20.00 0.00 22.00 22.00 0.00% 14.50 14.00 3.57%Large Alubia Imported 12.00 12.00 0.00 15.00 15.00 0.00% 19.50 20.00 -2.50%Flor de Junio ZAC. 11.00 14.00 -0.21 10.00 10.00 0.00% 16.50 14.00 17.86%Flor de Mayo ZAC 11.00 10.00 0.10 14.00 14.00 0.00% 10.00 10.00 0.00% 16.50 14.00 17.86%Bayo Berrendo JAL. 17.00Bayo ZAC. 10.00 10.00 0.00 18.00 18.00 0.00% 10.00 10.00 0.00% 17.00 17.00 0.00%Garbancillo DGO. 10.00 9.00 11.11% 12.50 12.50Canario SIN. 10.00 10.00 0.00%Cacahuate Bola GRO.Garbancillo zarco JAL.Azufrado SIN. 24.00 19.00 26.32% 17.50 16.00 9.38%Mayocoba SIN. 23.00 16.50 39.39% 18.00 16.00 12.50%Peruano SIN. 22.00 22.00 0.00 23.00 19.00 21.05% 20.00 15.00 33.33%

ZACATECAS MERIDA DURANGO NAYARITMARKET MARKET MARKET MARKET

MEXICO CITY MONTERREY GUADALAJARA SINALOAMARKET MARKET MARKET MARKET



Mercalimentos Consultores S.C. In Market Representatives 52+55 5362-7407, Fax. 53626724 Ailes 2 Chabacanos 4, Las Huertas, Atizapan de Zaragoza, Estado de México [email protected] US Black beans prices were again stable in the main markets. Mexican black beans remained stable in Mexico City and Monterrey, however registered a recovery of 15% in Guadalajara where last month had lost 10%. US Pinto beans: Prices in Monterrey registered a decrease of 13%. Mexican pinto beans remained with similar prices as last month, however in Monterrey these had also a reduction of 7%. U.S. Alubias: small and large alubias continue at prices from 18.50 to 22 pesos per kilo in the market. Prices of theses remained stable in June. Peruanos, Mayocoba, Azufrados. Prices increased in June from 20% to 35% in the different markets, finally reacting to the lower production this year, oscillating between 17 and 27 pesos per kilo. Colored varieties: Bayos, Canarios, Flor de Mayo and Flor de Junio.- prices of these preferred Mexican varieties were the ones with more changes in June. 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. Fresnillo Produces More Beans than they Consume NTR Zacatecas July 6th, 2015 Fresnillo Zac..- The national average bean consumption has decreased in the last years. This situation is one of the reasons why there is an over production of this legume every year. In the past, the average dry bean consumption in Mexico was 20 kilos per capita, however these days is only 7 kilos per capita, which means that in order to cover the year’s need, Mexico should produce only 800 thousand MT, but there is a surplus production. Zacatecas is one of the main dry bean producers of this legume. This year the state should plant no more than 500 thousand hectares to avoid over production causing lower prices with no profit for the producers. Enrique Flores – State’s Secretary of Agriculture (SECAMPO) informed that there were several factors that propitiated the lower consumption of dry beans amongst which are the substitution for fast food and the incorporation of women to the workforce. He commented that in 2014 Zacatecas planted 620 thousand bean hectares, 180 thousand less than in the past when they used to plant up to 800 thousand hectares. This was possible through the crop conversion program. The challenge for this 2015, is to convert 120 thousand hectares in order to reduce the bean planting area to 500 thousand hectares, most of these expected to be for black beans, helping to increase the prices paid to the producers. Flores informed that for the first time in Zacatecas, they are working to organize the bean production through a strategy named Planting Intention, which convokes the producers to present a written declaration to SECAMPO announcing that they will be planting dry beans and the variety/ies. The objective is to have the area and varieties that will be planted since the beginning of the season in order to make a projection of the production by variety.



Mercalimentos Consultores S.C. In Market Representatives 52+55 5362-7407, Fax. 53626724 Ailes 2 Chabacanos 4, Las Huertas, Atizapan de Zaragoza, Estado de México [email protected] He clarified that they do not intend to limit the plating to 500 thousand hectares since they cannot forbid the planting. However, they intend to avoid the excess production by providing the producers with seed for alternative crops such as barley, oats and feed corn to those producers more prone to diversification. Producers Receive Malted Barley Seed Zacatecas Online July 7th, 2015 In order to diversify crops in the communities nearby the capital City of Zacatecas, SECAMPO and Sagarpa delivered 129.4 MT of malted barley seed to 88 producers. This program is intended to provide them an alternative product to dry beans, helping also to obtain better profits. Zacatecas Major Carlos Pena, said that the beer industry will buy all the barley production. Bean Producers Receive 140 Million Pesos from the Dry Bean Crop Quality Incentive NTR Zacatecas July 6, 2015 Emilio Nava State Manager of ASERCA (Trading Support Agency from SAGARPA), informed that to this date they have delivered 76% of the 2014 Dry Bean Quality Premium Incentive Program. They expect to deliver the total before the end of July to the 8,119 producers that approved the quality certification. He recalled that this incentive corresponds to the 2 pesos per kilogram premium to up to 200 thousand MT in Zacatecas north region. New Dry Bean Producers Association in Zacatecas Imagen Zacatecas July 5, 2015 Sain Alto Zacatecas.- The Agro-Produce society, created in Sain Alto municipality, will be capable to process up to 3,700 MT of dry beans, once they consolidate the project of installing a bean plant that will benefit their 27 associates. This project will have an investment of 2.6 million pesos, however will bring an economic benefit of 20 million to this region. Budget of 18 million pesos For Crop Diversification in Fresnillo Imagen Zacatecas July 5, 2015 FRESNILLO, ZAC.- Producers in Fresnillo have received resources for 18.1 million pesos through the Productive Crop Diversification Program, supported by the State Dep. of Ag. SECAMPO. SECAMPO’s Enrique Flores talked about the benefit of decreasing the dry bean planting and planting other more profitable crops such as malted barley, sunflower for oil and wheat that have secured buyers, with stable prices. Flores also commented that Zacatecas will focus on planting more black beans which are the ones with a higher demand in the market. Dry Bean and Peaches Elevator Plant Inaugurated Imagen Zacatecas July 3, 2015 Sombrerete Zacatecas.- An elevator plant that will recieve and storage peaches and dry beans in the community of Zan Jose de Felix, was inugurated this month. The warehouse will benefit 30 producers of the Peach Producers Association that also plant dry beans.



Mercalimentos Consultores S.C. In Market Representatives 52+55 5362-7407, Fax. 53626724 Ailes 2 Chabacanos 4, Las Huertas, Atizapan de Zaragoza, Estado de México [email protected] Building a New Dry Bean Processing Plant in Zacatecas NTRZacatecas July 2, 2015 Fresnillo, Zac. .- The Zacatecas Producers Association have been working for several months now in the construction of a new dry bean processing plant in Rio Florido (Fresnillo). The objective is to add value to the beans and reduce transportation cost to the state’s capital City or to Calera municipality and reduce the participation of intermediaries. The 30 producers involved in this project expect to generate a higher price for their beans up to 12 pesos per kilo with the processing of 25 MT per day and the availability of packaging in bags from 1 to 25 kilograms. The project was presented to the State Department of Ag. requesting their support investment of 50% of the total investment although they have not received a response until now. Rain Damage Assessment in Guadalupe Zacatecas NTR Zacatecas June 30, 2015 Guadalupe Zacatecas.- The storms occurred in the last few days, caused damage in the Guadalupe municipality. SECAMPO will deliver diesel and seed (barley, oats and beans) to producers in order to palliate the situation. The assessment indicated that around 400 hectares of beans and other crops were damaged in the region Oats Planting Area Increasing in Durango El Siglo de Durango June 25, 2015 Durango.- “This agricultural cycle, it is expected that 40 thousand hectares will be planted in the state to lower the pressure over dry beans”, said Francisco Gamboa State Secretary of Agriculture. He explained that everything is ready to plant the oats under contract, which means that producers have secured their income. Crop Conversion Program “We are preparing to convert dry bean hectares to other crops to avoid the over production and improve prices”, he commented. But they are not only working on the substitution of beans with oats, they are also including sunflower seed in the Durango, Panuco and Guadalupe Victoria Rural Districts. As for the barley, he said that they will plant close to 2 thousand hectares instead of beans. New Dry Bean Variety Seed Controversy El Siglo de Durango June 20, 2015 Durango.- Producers continue to prefer Pinto Saltillo seed over new varieties. Although Durango intends to introduce new varieties derived from Pinto Saltillo but improved with shorter cycle and resistance to rust and disease, good for the export market, Durango producers don’t accept these. “We have been working on these varieties for 6 years and this is the first time we will deliver the seed” said Francisco Gutierrez a seed distributor. Producers resist to plant this seed since although has good qualities, the yield is smaller because the grain is larger and heavier which causes the bending of the plant. Andres Fernandez, President of the Bean Product System recognized the qualities of these, especially of the variety called Dorados, created in Durango, however expressed his doubt about the yields which would be reduced in at least 15% with expected yield of 600 kilos per hectare vs. the 700 kilos obtained with Pinto Saltillo.



Mercalimentos Consultores S.C. In Market Representatives 52+55 5362-7407, Fax. 53626724 Ailes 2 Chabacanos 4, Las Huertas, Atizapan de Zaragoza, Estado de México [email protected] Economic Report The end of June and the first week of July have marked a new exchange rate complicated scenario because of the close ties between the Mexican economy and the United States and also because of the international economic conflicts. Thus during the first week of July the parity U.S dollar / Mexican Peso, reached the historic 16.10 pesos per U.S. dollar influenced by the financial crisis in Greece and the announcement of the U.S’ unemployment rate reduction strengthening the U.S dollar. This situation represents a challenge for several industries in Mexico. While it is favorable for the exports, the importers of different inputs will have to increase prices because of the higher exchange rate. As reported in the previous months, this level of exchange rate is the one expected for the remaining months of 2015 and 2016. The Director of the Mexican Foreign Trade Development Bank, stated that Mexico continues to be well armored against the world’s financial markets turmoil. The high level of the international reserves and the public debt control consolidate the good macroeconomics. He stated that the current public debt represents 43% of the GDP and the international reserves are currently around US$193 thousand million. He considered that although the exchange rate has reached its highest level at around 16 pesos per U.S dollar, it is the result of the market’s volatility and Mexico is well prepared to face this situation. The Undersecretary of the Revenue supported this statement and Credit Suisse and the World’s Bank also considered that Mexico is on the right path to have a sustained growth considering the structural reforms mentioned before. Credit Suisse’s LATAM Chief Economist said that the Energy Reform will secure a sustained economic growth of 4 percent annual after year 2020. The World’s Bank Sr. Economist coincided that Mexico’s economy will receive the benefits of the investment in the oil and manufacturing industries. Nevertheless, the challenges remain: on one hand, the correct transparent implementation of the reforms and on the other, the other factors such as the insecurity and corruption, stronger institutions that can improve the domestic economy. On the brighter side, the National Statistics Institute – INEGI reported that the annual inflation rate registered in June, was the lowest since they have records with 2.87 percent from a previous 2.88 percent in May. Amongst the products that helped to obtain the good result in this indicator are the prices of eggs and some fruits. The structural reforms implemented in the energy and telecommunications industries increased Mexico’s Direct Foreign Investment, however also with higher level of restrictions reported the Business Finance Outlook. According to this report, Mexico is right behind China, Indonesia and New Zealand which are known for its restrictions. More than a year after the signing of the Free Trade Agreement between Mexico and Panama, it started in place on July 1st.Some of the Mexican products that will be exported duty free in this first stage are cars, auto-parts, oils, lubricants, shampoo, tequila amongst other products.



Mercalimentos Consultores S.C. In Market Representatives 52+55 5362-7407, Fax. 53626724 Ailes 2 Chabacanos 4, Las Huertas, Atizapan de Zaragoza, Estado de México [email protected] Exchange Rate Average exchange rate in June was 15.73 pesos per U.S. dollar. Exchange rate in the last business day of June was 16.01 pesos per U.S. dollar. Source: Banco de México

US DRY BEAN EXPORT STATS TO MEXICO



Mercalimentos Consultores S.C. In Market Representatives 52+55 5362-7407, Fax. 53626724 Ailes 2 Chabacanos 4, Las Huertas, Atizapan de Zaragoza, Estado de México [email protected] Weather Folllow-up Following are the maps showing the accumulated preciitation from January 1st through July 8th, 2015 in the bean states for the 2015 Spring-Summer cycle: Zacatecas (Spring-Summer cycle) accumulated precipitation map from January 1 to July 8th , 2015 Rain milimiters:

Durango (Spring-Summer cycle) accumulated precipitation map from January 1 to July 8th, 2015 Rain milimiters:



Mercalimentos Consultores S.C. In Market Representatives 52+55 5362-7407, Fax. 53626724 Ailes 2 Chabacanos 4, Las Huertas, Atizapan de Zaragoza, Estado de México [email protected] Chihuahua (Spring-Summer cycle) accumulated precipitation map from January 1 to July 8th, 2015 Rain milimiters:

San Luis Potosi (Spring-Summer cycle) accumulated precipitation map from January 1 to July 8th, 2015 Rain milimiters:



Mercalimentos Consultores S.C. In Market Representatives 52+55 5362-7407, Fax. 53626724 Ailes 2 Chabacanos 4, Las Huertas, Atizapan de Zaragoza, Estado de México [email protected] Guanajuato (Spring-Summer cycle) accumulated precipitation map from January 1 to July 8th, 2015 Rain milimiters:

Mexico’s accumulated precipitation map from January 1 to July 8th, 2015 Rain milimiters:



USDBC MEXICO MONTHLY REPORT JUNE – JULY...

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