In response to a decline in sugar production caused by adverse weather conditions in Mexico, the United States is set to diversify its sources of sugar imports, albeit at higher costs, according to the latest report from the U.S. Department of Agriculture (USDA).
The USDA's monthly supply and demand report (WASDE) revealed a revision in import projections, with imports from Mexico expected to decrease to 799,000 short tons (ST) from the previously anticipated 922,000 ST.
Mexico's sugar production for the 2023/24 season (Oct-Sept) is forecasted to decrease to 4.87 million ST, marking a significant decline of nearly 350,000 ST compared to the previous crop. The USDA noted that the sugarcane harvest in Mexico is experiencing unprecedented levels of delay, with key production parameters such as yields and recovery rates significantly below 10-year averages.
To offset the shortfall in Mexican supplies, the USDA projects that the US will increase imports at the highest tariff level to 715,000 ST, up from the previous estimate of 575,000 ST.
Meanwhile, domestic sugar production in the US remains relatively stable at 9.35 million ST.
In light of these developments, the US is adapting its sugar import strategy to mitigate the impact of reduced Mexican supplies, albeit at higher costs. This adjustment underscores the importance of diversification in the global sugar trade and highlights the resilience of the US sugar market amidst supply disruptions.