May 12, 2015
Sugaronline | http://goo.gl/8MSojB
Sugar production in Mexico will fall to 5.9 million metric tonnes in the 2014/15 crop year, setting the stage for a potential supply crunch in the United States later this year, the head of JSG Commodities said on Monday, according to Reuters.
Mexico is expected to export about 1.3 million tonnes to the United States in the 2014/15 crop year that runs through end-September, said Frank Jenkins, a veteran trader and head of JSG Commodities in Connecticut.
The two countries signed the deal late last year to end a trade battle over the sweetener. The agreement set minimum prices and quotas for U.S. imports from Mexico.
"Meeting the requirements" of the agreement will be a challenge, Jenkins said, especially if production falls below 5.8 million tonnes. Current trade estimates are as low as 5.7 million tonnes, he said.
"We have a lot of eggs in one basket. We're very much relying on Mexico," Jenkins said.
The deal will keep raw sugar prices above 24.50 cents a lb and higher to attract supplies from Mexico, Jenkins said. U.S. domestic raw sugar futures for July delivery on ICE Futures U.S. closed at 24.59 cents a lb on Monday.
Jenkins's output forecast for Mexico is about 1.7% lower than current projections from the Mexican government and would be down 2% from last year.
Total U.S. imports allowed through a tariff-rate quota system will be 56,045 tonnes less than last year in the second half of 2014/15, Jenkins said.