* Mexicans consuming more high fructose corn syrup
* U.S. HFCS exports to Mexico jumped 800 pct since 1995
* Trend may bring more sugar exports to the United States
By Mica Rosenberg
MEXICO CITY, Aug 23 (Reuters) - Soaring consumption of high fructose corn syrup in Mexico, aided by high sugar prices and paltry local cane harvests, could accelerate next year and boost sugar exports to the United States.
Mexican consumption of the corn-based sweetener, which is cheaper than sugar, nearly doubled from 653,000 tonnes in the 2008/09 cycle to 1.2 million tonnes this crop year.
While that amounts to less than 20 percent of U.S. consumption of high-fructose corn syrup, known as HFCS, analysts see Mexican demand for corn syrup rising nearly 17 percent in 2010/11 to around 1.4 million tonnes.
A growing market for U.S. corn syrup in Mexico is welcome news for the U.S. HFCS industry, which is battling a perception among some American consumers that sugar is more healthy.
Many factories in Mexico, which have used only dry sugar for years, are making the tonne-for-tonne conversion to use liquid corn sweetener without big cost increases.
About half the HFCS consumed in Mexico is made locally -- Mexico produces 400,000 to 450,000 tonnes a year. The rest is imported from the United States. (Graphic: http://link.reuters.com/kag95n )
From 1995 to 2009, there was an eight-fold increase in U.S. HFCS exports to Mexico, the U.S. Agriculture Department says.
Audrae Erickson, president of the U.S. Corn Refiners Association, said the trend in Mexico is partly due to a move in 2008 to relax trade barriers as part of the North American Free Trade Agreement (NAFTA), which has slowly phased out protections for sensitive products like corn and sugar.
The sharp increase in HFCS use in Mexico comes as the country's sugar cane producers struggle to maintain their crop in the face of bad weather and other problems. Last year, sugar output hit its lowest level in a decade, forcing the government to open a last-minute import quota.
In the coming season, Mexican sugar production is expected to increase slightly to up to 5.1 million tonnes. This could produce a glut that will allow it to boost sugar exports to the United States.
Rene Martinez, an official at Mexico's sugar chamber, said Mexico will send 900,000 tonnes of sugar north to the United States by the end of the year.
BATTLING IMAGE PROBLEM
Kevin Combs, vice president of U.S. commodities brokerage McKeany-Flavell, said Mexican demand for HFCS will stay strong even if the country's own cane harvests improve.
"Mexico will still maintain relatively high (sugar) prices and therefore the opportunity for HFCS in Mexico will continue next year," Combs said.
In the United States, the HFCS industry is fighting a perception among some consumers that corn sweeteners are more likely than sugar to cause obesity.
Producers say HFCS is no more linked to health problems than sugar. Still, some big bottlers like Pepsi are experimenting with using more cane sweeteners, Combs said.
U.S. consumption of HFCS dropped 14 percent to around 7.3 million tonnes since 2002 while sugar demand during the same period stayed basically flat, said Jack Roney, an official at the American Sugar Alliance.
"U.S. corn sweetener producers are feeling relieved that while they are losing market share in the U.S. they are gaining market share in Mexico. That is a great solace," he said.
But if the opposite trend accelerates in Mexico, it may irk some Mexican consumers nostalgic for sugar-sweetened versions drinks like Coca-Cola they grew up drinking.
"I like soft drinks better in Mexico. I have read that fructose is sweeter than sugar but it has a certain flavor that I personally don't like," said Enrique Hernandez, an avid soda drinker who lived a year in the United States.
Erickson and the corn refiners say most consumers cannot tell the difference between the two flavors.
(Editing by Missy Ryan and David Gregorio)