US Mexico Sugar Deal: What do you say Wilbur???
The consensus from the trading desk at CSC Sugar (parent company of Sugaright) is that a deal will be made between the US Dept of Commerce and the Mexican Sugar Industry. Hopefully, a long period of uncertainty is finally coming to an end. An announcement will be made by Monday, June 5.
What do we expect?
Direct consumption shipments from Mexico will be cut by over 50%
Raw sugar quality will be lowered to max 99.35 polarization
Raw sugar shipments must be in bulk vessels.
And if there is no agreement, it is expected that the TRQ will be increased to assure adequate supply of raw sugar to the refiners.
What is the consequence of this new deal for the food industry?
The amount of Mexican sugar that used to go for direct consumption to melters and food manufacturers will be dramatically reduced. Plus the lower pol raws delivered in bulk MUST be refined further creating a potential shortage of US refining capacity.
In addition, due to a smaller US beet sugar crop, basis the most recent WASDE, the USDA could increase the quota for the current year by 250,000mt. Even if they don’t increase the current year TRQ, it is likely that next year’s quota will be the largest in many years. This would stretch refining capacity, with or without Mexico.
To reduce the risk of liquid sugar shortages, Sugaright has acted proactively. Deal or no deal, we have made significant investments in increasing refining capacity and new technologies to assure an adequate supply of liquid sugar to meet the needs of the industry.
Sugaright, whether advocating for a free and open market, or opening new supply chains, or increasing refining capacity, our core value is to always act in the best interest of our customers.