Mexico’s sugar sector in 2026: Playing for margin in a game of strategy?

Mexico’s sugar sector enters the 2025/26 cycle facing the challenge of maintaining market balance after two years of weak production and high inventories. Although the industry managed to reduce part of its surplus by the end of the 2024/25 season, the prolonged period of elevated stocks had already placed significant downward pressure on domestic prices and producer margins.

For the new cycle, key risks include higher sugar production, stagnant domestic consumption, weaker exports to the US, and persistently low global prices. Additional fiscal measures and public health campaigns may further dampen demand.

A notable policy shift is the imposition of steep tariffs on sugar imports: as of 10 November 2025, Mexico introduced tariffs of 156% on most types of sugar and over 210% on refined liquid sugar, replacing the previous fixed tariff of approximately USD 360 per metric ton. This new regime is expected to curb imports and provide support for domestic prices.

Beyond market fundamentals, strategic behaviour among producers and traders plays a crucial role in price formation, often leading to competitive dynamics that can drive prices down.

While the recovery in cane yields is positive, structural issues such as flat consumption, high costs, and limited export competitiveness continue to constrain profitability. Diversification into energy and ethanol remains economically unviable under current conditions, so near-term stability will depend on keeping inventories close to 1 million metric tons.