Mexico's low sugar output could raise global sugar prices unless USDA seeks other sources for U.S. imports, trade group says

Andrew Rogers

LOS ANGELES , January 25, 2012 (Industry Intelligence) – According to an analysis by Jenkins Sugar Group Inc., the low Mexican sugar output could lead to an increase in global sugar prices unless the U.S. Department of Agriculture increases the amount of sugar imports from other sources to the U.S., ConfectionaryNews.com reported Jan. 25.

In its ‘Sugar and Sweeteners’ outlook report, the USDA reduced its forecast for sugar imports to the US during the 2012 fiscal year by 563,000 short tons raw value (STRV) to 2.893 million STRV.

The report also reduced the USDA’s forecast for sugar production in Mexico during 2011/2012 by 333,000 tonnes to 5 million tonnes.

According to Frank Jenkins, president of the Jenkins Sugar Group, whether Mexico’s reduced sugar production increase prices for food manufactures is contingent upon the USDA allowing additional sugar imports from other quota holders into the U.S.

Jenkins Sugar Group projects that at least 750,000 million tonnes of additional sugar imports to the U.S. will be needed during 2011/2012.

The U.S. will only be able to import sugar from countries that record a sugar surplus. It also only has preferential access to a capped amount of sugar in other quota holding countries.

Under various Free Trade Agreements, Chile, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Morocco, Nicaragua and Peru have preferential access to the U.S. sugar market.

Slightly less than half of them are forecast to have a trade surplus for sugar in 2012.

ConfectionaryNews.com reports that the most likely source for additional sugar exports may be Guatemala. The U.S. will have preferential access to 39,220 million tonnes of an expected surplus of 1,464,618 million tonnes.

The primary source of this article ConfectionaryNews.com, Crawley, England, on Jan. 25, 2012.

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