Mexico's Sugar Production Falls to 25-Year Low

Mexico's sugar industry is facing significant challenges, with production expected to hit a 25-year low in 2023/24, according to the USDA's April report on sugar and sweetners. This decline is attributed to a combination of unfavorable weather conditions, rising input costs, and reduced harvested area.

The report forecasts Mexico's sugar production at 4.572 million metric tons (MT), a 4% decrease from the previous month's estimate and a 12% drop compared to the previous year. This downward revision is based on data from Mexico's National Committee for the Sustainable Development of Sugarcane (CONADESUCA), which indicates a significant reduction in harvested area, reaching a 12-year low.

Several factors contribute to this decline. Drought during the growing season and excessive moisture during harvest have impacted sugarcane yields. Additionally, high fertilizer costs have limited farmers' ability to apply necessary inputs, further affecting production.

The decrease in sugar production has a direct impact on exports, particularly to the United States. The USDA report projects a record-low production of low-polarity sugar, specifically destined for the US market. Consequently, Mexico's total sugar exports to the US are estimated to reach a 17-year low of 427,000 MT, a significant drop from previous years.

The report also highlights that within Mexico, the production of standard and refined sugar for domestic consumption is taking precedence over low-polarity sugar for export. This shift is driven by historically high sugar prices in Mexico, incentivizing producers to cater to the domestic market.