Insight Focus
- Mexico’s sugar production will fall to 4.7m tonnes.
- This would be the lowest output in at least a decade.
- Mexico continues to import sugar to meet demand.
Mexico Sugar Production Continues Below the Last Two Seasons
Mexico continues on track to produce 4.7 m tonnes, the lowest sugar production in the past decade.
Sugar production continues to be below the past two seasons due to decreasing industrial yields because of prolonged drought.
Both weekly sugar production and cane crush are significantly below the past two seasons.
Source: CONADESUCA
We have seen an increase in cane acreage this season compared to last year. So far, the tonnes of cane per ha are above the past two seasons.
Source: CONADESUCA
We continue to see low volumes of precipitation. Since, Mexico does not have proper irrigation systems, cane development depends strictly on precipitation. So far, cumulative precipitation continues to be below the last two years as we as below the ten-year average.
With production at 4.7 million tonnes, Mexico will need to import sugar in order to continue exporting sugar to the US .
How much sugar will Mexico Import?
Even with lower sugar production, Mexico will be looking for sugar from its neighbors to enable it to fulfill as much of its US quota as possible. In order to meet US export volumes we believe Mexico will import around 500k tonnes. So far Mexico has imported around 168k tonnes leaving over 300k tonnes left to import. Import will likely come from Central America and Brazil.
Since the US does not produce enough sugar to meet domestic demand they have to import sugar. Most sugar US sugar imports come from Mexico due to their close trading relationship and proximity in location.
The combination of lower sugar availability from Mexico as well as continued demand from the US continues to put pressure on domestic prices, which will remain high.
