- We think Guatemala will produce 2.8m tonnes of sugar in 2020/21; its highest production in two seasons.
- This comes as the country has been graced with optimal weather for cane development throughout the year.
- We think bulk raw sugar exports will continue to reduce as producers prioritise the production of value-added bagged sugar.
Optimal Weather Boosts Guatemalan Sugar Production
- Guatemala should produce 2.83m tonnes of sugar next season, up 50k tonnes year-on-year.
- With this, production sits just 120k tonnes behind the record set in 2018/19.
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- The year-on-year production increase comes as a result of the increased rainfall seen in Guatemala, particularly between May and September this year.
- Precipitation levels during this period were higher than they have been for the last five years.
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- The only reason we think next season’s production will fail to reach record levels is because it has been hotter than it was in 2018/19.
- This was especially prevalent between January and May, where it was far hotter than it had been in previous years.
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- And in April, Guatemala had its hottest and driest April for the last five years.
- This will have hindered the canes’ performance and reduced yields.
Exports Increase with Production
- Guatemala’s increased sugar production means it could export up to 1.9m tonnes in 2020/21, up 7.4k tonnes from this season.
- The majority of this sugar will be shipped in bags and include raws for direct consumption, low quality whites and refined sugar.
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- This is something we have seen happening over the last five years, as Guatemalan producers believe it adds value due to its easier handling.
- As such, there has been a steep decline in Guatemala’s bulk raw sugar exports to the world market.
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- With this decline, preferential markets have increased in significance.
- The US and Taiwan account for 25% of Guatemala’s sugar exports, as it has access via Free Trade Agreements.
- These countries therefore remain a key source of Guatemala’s returns.
- However, Canada has been Guatemala’s main destination for the last five years due its close proximity allowing easy access.
- This will likely remain the case whilst bulk raw sugar exports stay low.
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Other Opinions You May Be Interested In…
- Market Talk: Hurricane ETA Hits Central America
- Central America: Capitalising on Thailand’s Poor Cane Crop
- Guatemala: Steady Crop Start
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