Insight Focus

• We predict the United States will import 750,000 tonnes of high duty sugar in 2023-24.
• Mexico is facing a second consecutive poor sugar harvest.
• Mexico’s exporting less sugar into the US could push No.16 prices up.

What is High Duty Sugar?

High-duty sugar is any sugar imported into the US that is not covered by trade deals or treaties. These trade deals can include the TRQ Program, Dominican Republic-Central America FTA (CAFTA-DR), or any World Trade Organization (WTO) agreements.

The high-duty sugar entering the US must pay a duty of USD 360/tonne or 16.33c/lb. In the past, this high duty discouraged sugar exports to the US without a deal or treaty being in place.

The amount of high-duty sugar entering the US has doubled in the past five years and we expect this trend to continue. We predict that the US will import 750,000 tonnes of high duty sugar in 2023-24.

According to a Sosland Report, an analyst at the International Sweetener Colloquium claimed that the US would “need 1.2 million short tons (1.1 million tonnes) from high-tier suppliers this year to achieve the USDA baseline 13.5% ending stocks-to-use ratio.”

High duty sugar started entering the US in higher volumes during the 2021-22 harvest when the No.16 (the US raw sugar price) started to surge.

High No.16 prices allow those selling sugar into the US to buy sugar from the world market, at the No.11 prices, pay the duty of USD 360/tonne or 16.33 c/lb (as well as other costs such as freight), and still have enough to make a profit. For the time being the world sugar futures and US domestic sugar futures are increasingly aligned.

Further Troubles with the Mexican Crop

Mexico is facing a second consecutive poor sugar harvest. Mexico usually produces around 5.7 million to 6 million tonnes of sugar yearly. During the 2022-23 harvest, Mexico only produced 5 million tonnes of sugar. The 2023-24 harvest dipped even further to an astonishing 10-year low of 4.7 million tonnes.

Mexico is the US’ largest sugar trade partner. It usually exports around 1.3 million tonnes of sugar to the US annually.

Mexico’s exporting 1.3 million tonnes of sugar in 2023-24 is looking more challenging as this year’s harvest progresses, which should push up the No.16 prices further, incentivizing sellers to sell even more high-duty sugar into the US.