Domestic prices climb 40%; imports expected to drop 33%

By DAVE WILKINS

Capital Press

U.S. sugar prices are rising as other food commodity prices have fallen.

Since the beginning of 2008, U.S. wholesale refined sugar prices have climbed roughly 40 percent, according to the USDA. Prices have exceeded 30 cents per pound since June 2008.

Meanwhile, global food commodity prices as a whole have declined by more than a third since their recent peak in mid-2008, the USDA reported.

U.S. sugar producers should see a bigger paycheck this year due to the upswing in prices.

Amalgamated Sugar Co. officials in Idaho have already projected better returns on the 2009 beet crop -- now being harvested -- compared with 2008.

The bullish outlook for sugar is based on lower supplies and a projected 33 percent drop in U.S. imports this year.

Imports from Mexico, which gained unlimited access to the U.S. market in January 2008, are expected to drop significantly this year due largely to depleted stocks and higher prices.

The USDA projects 2009-10 Mexican exports to the U.S. at 495,000 tons, less than half of the record 1.37 million tons exported during the previous marketing year.

Sugar prices in Mexico have surged on reports of tighter-than-normal supplies.

"Mexico is now projected to import a record 782,000 tons in 2009-10 even as international prices have risen to the highest levels of the decade," the USDA said in its latest sugar outlook report released Oct. 5.

According to the USDA, several factors have played a role in the recent upswing in U.S. and global sugar prices, including:

* Increased use of sugar by the domestic food and beverage industry in place of high-fructose corn syrup.

* Reduced sugar production in 2008-09 as U.S. sugar beet growers turned to other crops such as wheat and corn.

* A disruption in U.S. sugar-refining capacity caused by a refinery explosion in Louisiana in February 2008.

Total U.S. sugar supplies for 2009-10 are expected be about 839,000 tons lower than the previous year.

The tighter supply situation has prompted food and candy companies to call for more imports. So far, however, the USDA has not made any significant adjustments to tariff rate quotas, and U.S. sugar farmers insist that there's enough sugar for anyone who wants it.

In late September, the USDA set the 2009-10 tariff rate quota for raw and refined sugar at minimum levels, a move that drew applause from the industry.

"America's sugar producers have plenty of sugar for sale, and the USDA projects a sugar surplus again this crop year," American Sugar Alliance officials said in a statement.

"We are hopeful that the sugar beet and sugar cane harvests under way will continue to be strong, and assuming they are, we project that the market will remain adequately supplied for the foreseeable future," the alliance said.

U.S. sugar production is expected to total 8 million tons this year, an increase of about 500,000 tons from 2008.

However, the domestic stocks-to-use ratio -- a measure of projected supplies at the end of the marketing year -- are expected to decline to 8 percent in 2009-10. The stocks-to-use ratio hit a 33-year low of 11.8 percent last year.

Staff writer Dave Wilkins is based in Twin Falls. E-mail: dwilkins@capitalpress.com.

Online

www.sugaralliance.org

 

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