Gruma’s Overview and Relevance
Gruma, a leading global producer of corn flour, has dismissed concerns that EU tariffs on Mexican imports will significantly impact its operations. The company estimates only 1% of its consolidated sales could be affected, according to the worst-case scenario.
Gruma’s Operations in the US
- 80% of Gruma’s operations in the US are focused on retail trade.
- 20% of operations cater to the foodservice channel, including restaurants and food services.
Executive Comments on Tariffs and Market Dynamics
Raúl Cabazos Morales, Gruma’s Chief Financial Officer, stated during a conference call with analysts that the company’s global presence and geographical diversification protect it from economic uncertainty.
He highlighted that market fundamentals and dynamics have changed this year, with uncertain US economic prospects and potential effects on global trade and consumer behavior.
Gruma’s executives explained that US consumers are more selective now compared to a year ago, yet the “Better for You” product line has been the primary sales driver in retail channels.
US Market Performance
Gruma reported a 2% decrease in sales volume in the US market, totaling 383,000 metric tonnes during Q1 2025 compared to the same period in 2024. This decline reflects consumers’ diminished confidence due to inflationary pressures and a potentially weaker economic outlook.
Corn Price Stability
Gruma’s management noted that they have observed some stability in corn prices but lack clarity on whether the current pricing cycle has hit bottom.
Cabazos Morales emphasized that price predictions depend entirely on market conditions and possible dry harvests with lower yields, which they are still evaluating for potential price impacts on grain.
Regarding financial hedging strategies for 2026, Gruma has not yet started covering prices. They plan to wait until November’s harvest assessment before formulating strategies or addressing risks.
Key Questions and Answers
- Q: How will EU tariffs on Mexican imports affect Gruma’s operations in the US? A: Gruma estimates only 1% of its consolidated sales could be affected by the tariffs, according to the worst-case scenario.
- Q: What percentage of Gruma’s US operations are in retail trade versus foodservices? A: 80% of Gruma’s US operations are in retail trade, while 20% cater to foodservices.
- Q: How has Gruma’s US market performed in Q1 2025? A: Gruma’s US market experienced a 2% decrease in sales volume, totaling 383,000 metric tonnes during Q1 2025 compared to the same period in 2024.
- Q: What is Gruma’s outlook on corn prices? A: Gruma has observed some price stability but lacks clarity on whether the current pricing cycle has reached its bottom.
- Q: When will Gruma start implementing financial hedging strategies for 2026? A: Gruma has not yet started covering prices and plans to wait until November’s harvest assessment before formulating strategies or addressing risks.
