Mexico’s Sugar Exports to U.S May Drop as Drought Hits Crop

U.S. sugar imports from Mexico, the world’s sixth-largest producer, may fall to as low as 800,000 tons this season as the worst drought on record hurt crops.

Mexican sugar mills “signed contracts to export 800,000 tons of sugar this year to the U.S.,” Juan Cortina Gallardo, the president of the nation’s Sugar and Alcohol Chamber of Commerce, said in a phone interview today.

Mexico exported 1.42 million tons the previous crop season, according to the Agriculture Ministry. The U.S. buys about 99 percent of Mexico’s sugar exports, according to the U.S. Department of Agriculture.

Accumulated sugar production this crop year fell 14 percent to 1.1 million tons last week compared with the same period the previous year, according to a Jan. 14 chamber report. Drought caused by the La Nina weather pattern in northern Mexico is harming crops and driving up prices for some of those products.

“Traders may buy 200,000 tons of additional Mexican sugar to export to the U.S., but for us the most important issue is to cover domestic demand,” said Cortina.

Mexican sugar production for this crop year may range between 5.05 and 5.1 million tons, said Cortina. A new estimate by the industry will be set next week, he said.

Raw sugar for March delivery rose 1.1 percent to close at 24.89 cents a pound on ICE Futures U.S. in New York. The price posted a weekly gain of 4.4 percent, the most since Oct. 14.

To contact the reporters on this story: Carlos M. Rodriguez in Mexico City at carlosmr@bloomberg.net.

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net