Mexico Eyes Lower Sugar Forecast of 4.5 Million Tons

Mexico, the sixth-largest producer of sugar in the world, lowered its forecast for production of the sweetener to 4.5 million metric tons because of heavy rain during the harvest, said Agriculture Minister Francisco Mayorga.

Previously, the ministry had forecast output for the crop year that began Oct. 1 in a range from 4.5 million tons to 4.9 million tons, Mayorga said in an interview in Mexico City today. The North American country produced 5 million in the previous crop year.

Mexico may import 600,000 tons of sugar this year, the most in about 16 years, according to the country’s Chocolate and Candy Makers Association. Imports rose in 2009 after the worst drought in about 70 years cut domestic output. Heavy rain at the beginning of this year’s harvest damaged sugar cane crops.

“As the harvest progressed the goal of 4.9 million is frankly difficult to get,” Mayorga said, adding that last week’s harvest reports prompted the lower forecast.

The International Sugar Organization forecast a global deficit of 9.4 million tons of sugar, helping push prices to a 29-year high on Feb. 1.

Raw-sugar futures for May delivery climbed 0.35 cent, or 1.3 percent, to 26.47 cents a pound at 2:23 p.m. on ICE Futures U.S. in New York. Prices more than doubled in 2009, as adverse weather curbed output in Brazil and India, the world’s largest producers.
Import Quotas

Mexico imported 390,000 tons of sugar last year and has established 250,000 tons of import quotas for the current year. The country’s economy ministry has said it may decide in May whether to set additional import quotas.

Mexico’s corn output fell 12 percent to a “little more” than 20 million tons in 2009 from the previous year, Mayorga said. Production of the grain may be in a range of 23 million tons to 24 million tons this year, he said.

Mexico, the world’s second-largest importer of coarse grains, may import as much as 6.5 million tons of corn in 2010, Mayorga said. Japan is the world’s largest importer of course grains such as corn.
The Foreign Agricultural Service of the U.S. Department of Agriculture said Mexico may import 9.8 million tons of corn in the year that began Oct. 1, according to a Jan. 4 statement.

Source: Bloomberg