Grain Exports to Mexico Increase as Transportation Costs Fluctuate and Farm Prices Rise

Date Posted: Jun. 19, 2008

This article is reprinted from the USDA's June 19 Grain Transportation Report.

More feed grains were shipped to Mexico during the 1st quarter than during the same period a year earlier.


Farm prices increased for the major grain commodities (corn, wheat, and soybeans).


Transportation costs varied with mode and route.


About 2.7 million metric tons (mmt) of feed grains were shipped to Mexico during the 1st quarter, 23 percent more than the same period last year (U.S. Department of Commerce/USDA FAS, Foreign Trade Data).


Corn shipments to Mexico increased 49 percent to 2.5 mmt, wheat, at 0.73 mmt, increased 22 percent, and soybeans, at .97 mmt, increased just over 6 percent.


Increased grain imports by Mexico are fueled by a strong demand from its livestock sector and full implementation of the North American Free Trade Agreement, which eliminated corn tariffs in January 2008 (USDA, GAIN Report MX8017).


However, transportation cost varies among commodities and routes of shipment.


Although total transportation cost declined for waterborne corn and soybeans, it increased for waterborne wheat.


The opposite was true for commodities transported over land where the transportation cost for wheat decreased while soybeans and corn increased.

The cost of transporting corn and soybeans from Illinois to Mexico by water declined 6 and 7 percent, respectively, due to a significant drop in ocean shipping rates—down 24 percent from the previous quarter.


However, the decline was not enough to offset an 89-percent increase in trucking rates for Kansas wheat transported over longer distances by truck.


The combination of these factors resulted in the total transportation cost increasing by 12 percent.


High demand for trucking activity in that region is partly responsible for the increased trucking rates.


Transportation costs over land were pushed up by increases in both truck and rail rates.


However, transportation for Oklahoma wheat transported over land decreased partly due to a lower demand for trucking activity in the region, which decreased trucking rates.

With the exception of Kansas wheat, transportation costs changed only moderately.


In addition, farmers received robust prices during the quarter.


Farm values for all the commodities increased during the 1st quarter.


Increases ranged from 17 to 24 percent for grain transported by water and 21 to 25 percent for grain transported over land.


Due to the high farm prices, the total value of feed grains exported to Mexico during the 1st quarter increased by about 43 percent to $592.6 million (U.S. Department of Commerce/USDA FAS, Foreign Trade Data) over the same period a year ago.



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