U.S. Sugar Imports From Mexico May Surpass Forecast

U.S. sugar imports from Mexico may fall less in 2010 than the U.S. Department of Agriculture is forecasting after this year’s surge, Imperial Sugar Co. executives said.

Mexican imports in the coming marketing year may reach 350,000 short tons, more than twice the 165,000 tons the USDA forecast on June 10, said Patrick D. Henneberry, senior vice president of the Sugar Land, Texas-based maker of Imperial and Dixie Crystals sweeteners. Mexican millers may want to keep sugar flowing to the U.S. since tight credit markets have made it tough to finance warehouse space and inventories.

“The thing that might drive a little bit more than the USDA is currently forecasting is the financing,” Henneberry, 54, said in a Houston interview. “The Mexican sugar industry still heavily relies either on financing of stocks and warehouse or direct cash sales in order to generate cashflow during the crop to pay the farmers.”

U.S. imports from Mexico in the marketing year that starts Oct. 1 still will be a fraction of the amount that crossed the border this year after the two nations lifted trade restrictions on sugar on Jan. 1, 2008, as part of the North American Free Trade Agreement. The U.S. will purchase 1.26 million tons from its southern neighbor in the year ending Sept. 30, Henneberry said. The USDA projects imports of 1.15 million tons in the current marketing year.

‘Eliminating Their Stocks’

“Part of the imports that we received this year was de- inventorying of their supply,” John C. Sheptor, Imperial’s chief executive officer, said during the interview yesterday. “It wasn’t direct production as much as it was eliminating their stocks. The ability for the Mexican farmer through the millers to send to the U.S. will be challenged. They won’t have the sugar to ship to the U.S.”

Imperial formed a joint venture in 2007 with a Mexican producer to market the sweetener in the U.S. The company has sold about 55,000 tons of Mexican sugar in the U.S. this year.

U.S. output may increase 5.9 percent to 8.025 million tons in the next marketing year, the USDA said.

source: bloomberg