UPDATE 1-Bad U.S. weather forces sugar producers to declare force majeure, prices jump

prices jump@ (Adds context, comments)

NEW YORK, Nov 13 (Reuters) - Two sugar beet producers declared a surprising force majeure due to freezing U.S. weather conditions, according to market participants and company officials, driving the market higher on Wednesday.

Beet producers Western Sugar Cooperative and United Sugars Corp issued force majeure notices to clients late Tuesday, according to three market participants, after a cold snap hit large portions of the United States.

March ICE sugar futures were up 2.1% in the session to $334.30 a ton. Force majeure is declared when a company is unable to meet its commercial commitments due to unforeseen events.

"The recent unprecedented weather conditions have resulted in Western Sugar allocating its available supply of product among its customers," said Heather Luther, general counsel for Western Sugar Cooperative, based in Denver, which operates across Colorado, Wyoming, Montana and Nebraska.

"These are the worst weather conditions we have had as a cooperative," she said, which dates to 2002.

United was not immediately available for comment.

Freezing temperatures in the northern United States have affected beets. Frost in the south is also weighing on sugarcane growers, according to a report from World Weather Inc.

Prices rose Tuesday on expectations that a shortage in the United States will result in greater imports from Mexico and other regions, traders said.

Expectations for the U.S. crop were cut last week and will likely be downgraded further, said Michael McDouggall, managing director of Paragon Global Markets.

The U.S. Department of Agriculture estimates the amount of sugar it expects to need from Mexico annually. The forecast will be set by next month's World Agricultural Supply And Demand Estimates (WASDE) report.

While the U.S. will look to Mexico to meet initial incremental demand due to a shortfall, market participants disagreed about whether Mexico would have sufficient supplies on hand to meet U.S. need, or whether the U.S. would need to look to the world sugar market.

If Mexico cannot meet the incremental U.S. needs, imports will likely come from Central America and Brazil, market participants said. (Reporting by Jessica Resnick-Ault in New York; Editing by Lisa Shumaker and Marguerita Choy)

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