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- Mexican sugar flows into the USA nearly tripled in February, but more are still required.
- Free Trade Agreement (FTA) sugar arrivals could slow down in April and May too, as Colombia’s wet season has hindered production.
- Tariff Rate Quota (TRQ) raw sugar imports are a little behind the previous seasons’ rate, but this is not a worry at the moment.
Imports from Mexico
- In February alone, 133k tonnes of Mexican sugar entered the USA.
- This was a welcome change after a very slow start to shipments this season.
- However, the latest WASDE release highlighted fears held by the US Department of Agriculture (USDA) that Mexico might not fulfil its quota.
- The quota is currently estimated to reach 1.7m tonnes (or 1.9m short tons).
- To hit this target, Mexico will need monthly shipments of 210k tonnes until October this year.
- This rate of sugar arrivals seems highly unlikely though, due to crop shortfall (track this using our interactive Crop Models).
- According to some reports, Mexico will soon inform the USDA that they only ship 1.4m tonnes this season.
- This means the US will indeed need to source more supply from the world market.
Imports Under Free Trade Agreements (FTA)
- Shipments of FTA sugar have been faster than in previous years so far this season.
- This is mostly due to Colombia, the largest quota holder, shipping nearly 50% already.
- The rate of shipments should slow down in the coming months, however, as Colombia reduces exports in the wet season.
- This rain usually disrupts production and, hence, the amount of sugar available to export in April, May and June.
- This means shipments from another origin will need to increase for the high FTA import rate to continue.
- However, if a global refined quota is opened, we expect to see these entries reduce and instead enter as global refined quota sugars.
Imports Under Raw Sugar TRQs
- Raw sugar TRQ entries are behind the historical norms.
- This is surprising given that the refineries are expected to be working at maximum capacity during the current period.
- 500k tonnes have been cleared under this quota to date.
- And most large quota holders have already shipped their allocation (or a large portion of it).
- Many small quota holders who don’t usually fill their quotas have seen their volumes redistributed to countries that do.
- Whilst the Dominican Republic are also behind on imports so far this season, we have no doubt that the TRQ will be met.
- However, the third largest quota holder – the Philippines – remains a significant concern.
- They have failed to ship their full quota in the last two seasons and it looks like they will fail to do so again…
- The only question is by how much will they fall short this season?
- You can explore individual TRQ fill rates by country in the ‘Imports – WTO Raws Imports’ section of the USDA Dashboard.
