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Mexico, U.S. agree to extend deadline for sugar trade talks - source

(Adds background on sugar trade dispute)

MEXICO CITY, May 1 (Reuters) - The Mexican and U.S. governments agreed to extend the deadline for negotiations over a sugar trade agreement to June 5, a source with knowledge of the talks said on Monday, as both sides seek a new deal amid heightened tensions between the neighbors.

The previous deadline to conclude the talks was Monday.

The U.S. sugar industry pressed the Commerce Department late last year to withdraw from a 2014 trade agreement that sets prices and quota for U.S. imports of Mexican sugar, unless the deal could be renegotiated.

The latest twist in the sugar trade dispute between Mexico and the United States comes as ties between the two nations have frayed under U.S. President Donald Trump, who took office in January and wants to revise the North American Free Trade Agreement with Mexico and Canada to better serve U.S. workers and companies.

Mexico is the top foreign supplier of sugar to the United States, a coveted 12-million-ton market where the U.S. government gives export quotas to about 40 sugar-producing countries each year through trade programs.

Mexico is due to ship about one-third of U.S. imported supplies this year. (Reporting by Adriana Barrera; Editing by Sandra Maler and Peter Cooney)