The Price of Sugar Cane in Mexico

Mexican sugar mills continue to wait for the announcement of the reference price that is the basis for the calculation of payments to cane growers. Usually in October of each year, the Comite Nacional para el Desarollo Sustentable de la Cana Azucar (CNDSCA), or the “National Committee for the Sustainable Development of Sugarcane,” announces the reference price and revises the prior season's reference price to reflect the actual prices mills have received for their sugar.

The reference price is based on prices paid in central markets in the Federal District, Guadalajara , Puebla , and Toluca . Exports are also taken into account on a weighted average basis. The reference price is 57 percent of the price of estandar sugar, or standard sugar, which accounts for about 67 percent of the sugar produced in Mexico .

As a result of high prices in last few months of the 2008/09 season, mills are bracing for an increase in the reference price, which was initially 5,500 pesos per metric ton (MT). This yields a net price of $US382.67 per MT of cane, down from $US411.70 per MT the year prior and the lowest price paid to growers since the 2002/03 season. In addition to the revision, mills will also receive an estimate for the upcoming season.

Once the announcement is made, many mills will likely begin to seek to market portions of their 2009/10 crop. USDA currently estimates Mexico will export 495,000 short tons, raw value, or slightly over 400,000 MT of sugar on a physical basis. With about 25 percent of this sugar already committed, the United States cannot expect to receive the massive inflows they received in 2008/09.

McKeany-Flavell constantly monitors developments in the sweeteners market. Please contact us for more information about sugar or other food commodities.

McKEANY-FLAVELL COMPANY, INC.