AVENTURA, FLA. — If Brazil is the buzz word for international sugar markets, then Mexico is the key term for the domestic sugar market.

Conadesuca, the national committee for the sustainable development of sugar cane in Mexico, forecast the country’s 2024 sugar production at 4.959 million tonnes, actual weight. The US Department of Agriculture in its February World Agricultural Supply and Demand Estimates report offered a lower forecast at 4.875 million tonnes, down 141,000 tonnes from its January projection and down 349,248 tonnes, or 7%, from a year ago. But Frank Jenkins, president at JSG Commodities, believes the 2024 sugar outturn in Mexico is even lower.

“The only difference between our numbers and the USDA number is the production estimate,” Jenkins told attendees Feb. 26 at the International Sweetener Colloquium in Aventura. He projected 2024 Mexican production at 4.5 million tonnes, down 14% from 5.224 million tonnes in 2023 and down 27% from 6.185 million tonnes in 2022.

Jenkins, as well other presenters at the Colloquium, highlighted the concerns about the Mexican sugar crop as Mexico is the primary supplier of imports to the United States, a net importer of sugar and one of the top consumers of sugar in the world.

“It’s not just about the weather in Mexico,” Jenkins said. “The canes aren’t getting any younger there, and what we know is healthier crops tend to have a fatter tail and a longer tail than a stressed crop.”

Jenkins noted the lack of fertilization having an impact, comparing the difference between outputs from Mexico’s drought-stressed crop with Louisiana’s drought-reduced but overall strong 2023 cane production.

“They didn’t have the exact same weather (as Mexico), but they had similar challenges, and their results were a lot better,” he said.

The agreements that suspend countervailing and antidumping duties on Mexico’s sugar exports to the United States prohibits Mexico from importing sugar from third countries to complete their fulfillment with the United States, although the practice is debatable as Mexico contends it has the right to import high-tier sugar just as the United States does under the agreements. With Mexico unable to satisfy its export commitment, the United States will have to rely on high-tier imports to fulfill its growing demand for sugar unless the US government steps in and increases the tariff-rate quota.

Jenkins calculated the United States, in an effort to achieve the USDA baseline 13.5% ending stocks-to-use ratio, would be able to import only 390,000 tons from Mexico and would need 1.2 million tons from high-tier suppliers this year. But Jenkins said this overreliance on high-tier imports is concerning as it has the potential to weaken the already established agreement with Mexico.

“We got really good at importing Mexican sugar within the last 10 to 15 years and the infrastructure is in place and the relationship is in place and they’re the most efficient supplier to our country because they’re on our border and it was a very efficient trade flow,” he said.

Jenkins said domestic sugar prices are likely to remain firm despite expectations for a healthy sugar beet crop this year, mainly since domestic sugar prices tend to closely follow the world market prices, especially as high-tier imports remain large. But he said price relief tends to come after the typical time of procurement for US buyers.