Insight Focus
- The cane crop that’s just finishing in Mexico might be the smallest in 10 years.
- As a result Mexico has imported sugar.
- For 2023/24 crop we are concerned about how much cane is being replanted.
Mexico’s Sugar Production Decreases Due to Drought
We think Mexico will produce 5.2m tonnes of sugar in the cane season that’s just finishing. Depending on the amount of cane crushed in the tail of the crop the total output may fail even to reach this low level. Mexico usually produces around 5.6 to 6 million tonnes of sugar per year; this could be the worst crop in a decade. As a result, Mexico is importing small amounts of sugar to cover local demand.
Cane Rebound Threatened by Poor Plantings
We hope that sugar production will return to normal levels in 2023/24 at around 5.8m tonnes. Precipitation levels this year have been normal which should help.
However, there is potential for the crop to fall below 5.8m tonnes as we are hearing reports of limited renovation of cane fields and lower reseedings, less cane being set aside for seed and less fertilizer use.
Source: Sinfocaña
What’s The Outlook for Mexico Sugar Exports?
Less production and an increase in imports means less export availability from Mexico. For this season sugar flows from Mexico to the US will decrease to one million tonnes (or perhaps lower). We expect next year for exports to get back to average levels at 1.2 million tonnes.
With exports to the US decreasing the USDA has announced the re-allocation of the TRQ allocation to ensure sugar supply. It would not be surprising if there is another reallocation if Mexico is unable to meet 1 million tonnes of exports.
With exports to the US decreasing world market exports from Mexico also decrease but should return back to normal this upcoming season.
