Mexican Sugar Update

As of March 29, the Mexican sugar industry had produced 3.553 million metric tons (MMT) of sugar, nearly 65 percent of the industry's estimate of 5.5 MMT for the 2007/08 season. Last season, Mexico had produced 3.294 MMT by this date, which was 62 percent of 2006/07's production of 5.3 MMT. The current crop is definitely on pace to hit the production estimate, and if the rainy season doesn't come early and the mills are able to get all of the harvestable cane from the fields, it is possible production will surpass the estimate.

Mexican sugar production continues to grow on both increased acreage and better yields. Many of the larger independent groups are buying land to increase their production and also benefit from the high prices paid for cane.

FEESA, the government trust that operates 13 mills, has produced 911,508 MT so far and hopes to surpass 1.4 MMT this year. FEESA's mills produce both estandar and refinado sugars. They have produced 271,300 MT of refinado sugar to date.

Beta San Miguel, Mexico's largest private sugar group, has produced 380,596 MT so far and anticipates production reaching 550,000 MT by the end of the campaign. Beta San Miguel currently produces estandar and blanco especial sugars at their five mills. They are planning to open a new refinery at their mill in El Naranjo in the near future.

Mexican sugar exports to the U.S. have increased in the aftermath of the explosion at Imperial Sugar Company's refinery in Savannah, Georgia. We anticipate Mexican sugar exports will surpass the current USDA estimate of 475,000 MT, possibly by 100,000 MT.

Refined sugar will account for a higher percentage of the Mexican sugar imported by the U.S. this year as compared to years past. Logistical improvements have helped to move more refined sugar, although achieving the projected level of increased imports will depend upon the availability of transportation equipment and the reliability of the supply chain to deliver on a timely basis.

With growing production and increases in HFCS consumption in Mexico, exports should continue to grow as long as the U.S. and Mexican governments don't try to modify the sweetener terms established under NAFTA.

Please contact us if you would like to know more about the Mexican sugar industry, or about opportunities to source Mexican sugar.

McKEANY-FLAVELL COMPANY, INC.