Peso Gets Sweeter Despite Sugar Battle

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Mexican sugar exporting could go sour as officials wait to see whether a petition filed by U.S. sugar producers will affect the industry’s bottom line.According to a report by WDAY news, “A petition, filed in March by a coalition of U.S. sugar producers, alleges that the Mexican sugar industry is dumping sugar into U.S. domestic markets and that Mexican federal and state governments have provided substantial subsidies to create cheaper prices and benefit their producers.”

If U.S. producers win their case, it could greatly impact trade between the two countries. Currently, the Mexican sugar industry exports about 1.5 million tons of sugar to the United States annually.

Despite this bitter battle the Purchasing Managers’ Index did show an uptick in production, increasing to 51.8 from 51.7 in March.

However, Reuters notes, “[Data] showed the pace of Mexican factory export growth slowed in March, pointing to a sluggish economic recovery. Most of Mexico’s exports are manufactured goods, and nearly 80 percent of them are sent to the United States.”

From cutting sugar exports to reducing auto production, Mexico is losing popularity as a global supply chain opportunity. Ford Motor Co. (F) recently announced plans to move its production back to the United States from its current plant location in Mexico.

According to Bloomberg, “The Escobedo [the Mexican] plant will be a Navistar-only facility where the company will continue to build its own medium-duty and heavy-duty trucks, Steve Schrier, a spokesman, said in an e-mail. He declined to comment on whether Ford’s move would lead to job losses there.”

Despite the trends in de-emphasis on Mexican exports to the United States, the peso continues to recover. According to BusinessWeek, “Mexico’s peso volatility dropped for a 16th straight day to the lowest level since 2008 as data showed an expansion in service industries in the U.S., the country’s biggest trading partner.”

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