JPM-Gruma Com Price Trend Improves in 3Q as Mx Flour Prices Tick-Up-Positive...-20251001

In September, corn prices (the key cost component for Gruma) went up after fourconsecutive months of declines, surging 2.1% m/m after August’s -5.2% declinebut implying a 5% y/y decline. Furthermore, for 3Q25 corn prices ended up +0.9%y/y vs +25% on average in the previous two quarters. On top of the improved costtrends into 3Q, flour pricing dynamics ticked up slightly into September with bothGruma & Minsa increasing prices m/m (0.5%/1.2%) with the latter outpacingGruma after lagging for more than 6 consecutive months. On a y/y basis,September Corn Flour price growth remained in negative territory for both. Still,for 3Q, Gruma’s flour prices end up flat vs -3.1% for Minsa (both lagging F&Binflation that is at ~5%). It’s also important to note recent government efforts tostabilize tortilla prices through the “Acuerdo Nacional Maiz-Tortilla” proposed by President C. Sheinbaum, which aims to ensure fair prices and boost productivityvia voluntary participation from tortillerias (here). With this combination offactors (cost & price), Maseca’s implied gross margin remains robust at 84.4% forQTD, above vs the previous two quarters. Still, we remain with a N-rating on Gruma trading at an undemanding valuation of 5.8x 2026E EV/EBITDA and 11.2xP/E . However, considering subdued pricing power and a lack of near-termcatalysts, we see limited potential for positive surprises, while profitability isexpected to remain under pressure in the short term in the US (here for our latestupdate).

•Corn Flour Price Trends: Maseca’s average corn flour price in Septemberwas Ps190.3 per 10kg bag, up +0.6% m/m and up a modest +0.5% y/y, with3Q25 prices essentially flat y/y. Minsa’s prices also increased, -1.3% m/m or-2.2% y/y but compares to a -4.2% y/y in August. Both brands’ price growthcontinues to lag Mexico’s F&B inflation (+5.1% QTD), signaling limitedpricing power in the current environment.

•Corn Price Movements (cost component): Average corn price in Septemberwas Ps74.1/bushel, up+2.1% m/m but -5.0% y/y. For 3Q25 average corn priceend at Ps74.3, flat y/y but improving vs a 30/16% growth in the previous twoquarters.

•Implied Gross Margin: Despite soft pricing, Maseca’s implied gross marginremains robust at 84.4% for QTD, up from 81.4% in 2Q25 and 79.7% in 1Q25,setting a resilient trend and supporting profitability even as costs fluctuate.

•Regulatory and Policy Context: Government efforts to stabilize tortillaprices—through the “Acuerdo Nacional Maiz-Tortilla” led by President C.Sheinbaum—aim to ensure fair pricing and boost productivity, adding anotherlayer of complexity to market dynamics.