Mexico’s Sugar Output Seen Topping Forecast as Yields Improve

Sugar output in Mexico, the biggest supplier of imported sweetener to the U.S., “will probably be higher” than estimated last month as favorable weather improves yields, according to the head of a mill-owners group.

Production in the year that began Oct. 1 may top a December forecast by 6.9 percent, totaling as much as 6.2 million metric tons, Juan Cortina Gallardo, the president of the Sugar and Alcohol Chamber of Commerce, said in a telephone interview from Mexico City. Beneficial rains for crops, along with increased replantings and enhanced plant varieties, lifted productivity by 10 percent to 15 percent, he said.

The government in December predicted output at 5.8 million tons, up from 5.1 million tons a year earlier. Cortina said the final figure may be 300,000 to 400,000 tons higher than last month’s estimate.

Mexico, the world’s sixth-largest producer, sends most of its exported sugar to the U.S. under a free-trade agreement. This year, exporters have sold about 1.3 million tons to American buyers, compared with 1.1 million a year earlier, Cortina said. With the U.S. facing the largest surplus in more than a decade, Mexican mills may have to boost shipments to other markets, he said.

The government will make a new production estimate in the next two to three weeks, he said. In the first 16 weeks of the season to Jan. 19, production was 1.83 million tons, compared with an average of 1.42 million in the past five seasons, according to data from Conadesuca, an industry group.

Over the last five years, Mexican consumption has fallen to about 4.3 million tons from 5.3 million, in part because of increased use of high-fructose corn syrup as a sweetener, creating the surplus that has pushed domestic prices below production costs for many growers, Cortina said.

To contact the reporter on this story: Marvin G. Perez in New York at mperez71@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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