Sugar Agro-industry at 4 May 2009
• Cortina guarantees domestic supply
• Mexican sugar has helped the US market recover inventory levels
• Production in free fall
• Preliminary Report of the 2008/2009 Harvest at 25 April
• Weekly market
In the midst of the A (H1N1) influenza virus emergency, the president of the National Chamber of the Sugar and Alcohol Industry (CNIAA), Juan Cortina Gallardo, confirmed to a national newspaper that the sugar supply for the domestic market was guaranteed. In response to another reporter, Angel Contreras of “El Golfo de la Ciudad de Cordoba”, he also affirmed that “the USA needed our sugar and we are supplying it to them; we are going to export close to a million tons of sugar to them (…) we have been doing well.” He corroborated to both publications that sugar production will reach 5.2 million tons this harvest, against a domestic consumption of 5 million tons, and for this reason he once again emphasized that supply was guaranteed. Now what is unclear is whether we really will produce 5.2 million tons and whether things really will be good for everyone.
To date nothing is known about anyone in the agro-industry chain being infected with the virus, but such a case could surface at any moment. With the harvest entering into its final stages, the appearance of a person carrying the virus could damage the “successful” image portrayed by the sugar agro-industry – this year at any rate. One million tons of exports are headed towards the USA, especially now that prices in this market are so high and inventories are so low. That the domestic sugar industry helps satisfy demand stemming from our principal trading partners is okay, as long as there are sufficient reserves in Mexico to face possible domestic emergencies.
Panic buying is usually a result of ill-conceived, badly structured, deficiently ordered and, above all, contradictory information. This becomes worse when it is not adjusted to reality or when there is a deja vu about previous experiences. It is common in Mexico to think the contrary when we hear it said that “there is no problem”, “it is a simple cold”, “everything is under control” and “we have sufficient medicine”. In this present influenza crisis, people rushed to the stores and supermarkets to stock up on provisions because they are wary of the information being given out. The case of sugar illustrates the same point. For example, Cortina Gallardo told the media that the price of sugar was not going to vary throughout the year. This is the exact opposite of what we have seen with the sugar cane groups in the country over the last couple of weeks. They have increased the price “the Mexican way”, as Blackaller, the sugar cane leader of the CNPR said. There is little doubt that when we hear these statements we must think them through, especially when we consider that not everyone will do that well this year – most likely only those who for the most part seem to do well.
Production in free fall
In the week of 18 to 25 April only 161,315 tons of sugar were produced, 56,653 tons less than the week before. As we can see in the table below, real production shows a significant downward trend that was not anticipated in estimated production. If the estimation were adjusted to the 5.2 million that continues to be anticipated for the end of this cycle, the trend would also show a very pronounced decline similar to real production. At this same date in the previous harvest, six sugar mills had finished their production. This year sixteen have done so, according to information released by the Sugar Information System of the Ministry of Agriculture (Sagarpa). Our own accounting shows only 14, including mills that did not harvest this year. The fact is that there is insufficient sugar cane to grind and red numbers will appear in final production reports for the vast majority of sugar mills.








Preliminary report of the 2008/2009 harvest at 25 April
In accordance with information from Sagarpa, at 25 April 2009 there are 38 mills harvesting, with a harvested area of 574,084 hectares, 76 thousand more than in the previous harvest, an industrialized volume of 38,364,389 tons of gross crushed cane, a production of 4,463,871 tons of sugar, 1,309,497 tons of molasses and 12.3 million liters of alcohol. Compared to the previous harvest, at the present date 137,656 tons less sugar has been produced and 1.75 million tons less cane, in spite of the greater area harvested. This is because of the huge fall in field yield – a national average of around 14 tons per hectare.

In the 24th production week, an average of 66.83 tons of sugar cane per hectare was produced with a factory yield of 11.64. To date 1.48 million tons of refined sugar has been produced and 2.98 million tons of standard grade. The average for sucrose in sugar cane was 13.81, the highest to date.





Weekly market
The main news in the sugar market is that there have been no casualties reported with respect to the outbreak of the human influenza virus. The bad news is that the mills that finished harvesting accumulated sugar production losses of 166 thousand tons compared to the previous harvest. San Gabriel, Independencia and La Concepcion mills produced 44 thousand tons between them in the previous harvest. This should be added to the first figure. Out of the 14 mills that have finished, only Tres Valles exhibits positive numbers. The numbers don’t bode well for the future. In contrast to what was stated by Cortina Gallardo, we cannot forecast that sugar prices will maintain their present levels, given that inventories are very low at the end of his harvest. It’s only left to the Minister of Health to declare it otherwise for the good of the nation.