This report was produced by Zafranet, information page on sugar and sweeteners in Mexico.
The price of cane in Mexico is related to the average price of sugar on local markets, exports to the US and the world market.
To establish the reference price, the percentage of the demand is assumed, as shown in the table.
The final price depends on how much sugar is exported to which market, and in what proportion.
A reference price is created for the sugar, which is used to define the price of the cane paid to farmers.
This represents a problem for Mexican farmers because exports to the world market are growing.
This is a problem because a higher price is paid domestically and, in the US, where the No. 16 is the benchmark for pricing sugar imports from Mexico.
By comparison, the world market price is almost 50% below the domestic market and 40% below the US.
This affects the profitability of the Mexican producers, whose returns are already lower than those of their US counterparts.
This chart shows the movements of the world price (No. 11), the US price (No. 16) and Mexican domestic price between July 2014 and June 2022.
If this trend continues, the price Mexican farmers receive for their cane may fall, even if domestic and US prices remain high.
This is because the global market could turn out to represent a larger share of Mexico’s total sugar sales.
In turn, the world market is going to represent a higher percentage of the prices that the farmers receive. There has been an upward trend in world market prices since 2020.
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