Mexico's sugar industry will struggle to meet US import needs during the 2017-18 crop year as the country's mills are ill-equipped to meet requirements of a new trade deal agreed in June, Rabobank said on Thursday. A US-Mexico sugar pact hammered out earlier this year will force Mexico's mills to reorganize and produce a new type of sugar, Pablo Sherwell, Rabobank's head of Food & Agribusiness Research for North America, said at an industry conference.
Mexico predominantly produces a sugar known as estandar, which is higher quality than the raw sugar. The sugar deal, which reformed terms of a 2014 agreement, said Mexico will need to supply at least 70 percent of its sugar quota to the United States as raw supplies, to feed cane refiners. US refiners had said the 2014 agreement was starving them of raw supplies and crimping their margins.
The US Department of Agriculture (USDA) has forecast US import needs from Mexico at about 1.5 million tonnes, leaving the quota for raws at over 1 million tonnes.
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