Sugar: supplies down, prices up, imports called for

By Lorraine Heller

- Last updated on GMT

Related tags: Sugar, Sugar beet

Manufacturers of food and beverage products that contain sugar are
calling on the US Department of Agriculture (USDA) to allow for
more sugar imports in order to top up the nation's reduced sugar
production and prevent a shortage of supply, it emerged this week.

The combined effects of hurricane damage to sugarcane crops, delayed sugar beet harvest, serious transportation problems and the temporary closure of a major sugar refinery have severely restricted the nation's sugar supply, said the Sweetener Users Association.

According to the USDA's World Agricultural Supply and Demand Estimates, published earlier this month, sugar stocks on September 30 2006 are forecast at 667,000 tons. This corresponds to just three weeks of supply or 6.4 percent of use, compared to an average level of over 15 percent, said the association.

"If realized, this ending stock level would be 39 percent lower than ending stocks for September 30, 2005 - a level that was itself associated with extremely tight market conditions - and two-thirds below the level of ending stocks in 2003-04,"​ said the Sweetener Users Association in a letter to the Under Secretary of Agriculture earlier this month.

"In these circumstances, nothing could be clearer than the need for the Department to permit additional supplies,"​ it added.

Indeed, tightened sugar supplies have contributed to price increases for the commodity. The wholesale price for beet sugar is currently around 42 cents per pound, compared to last year's price of 23 cents.

"Without additional imports, prices will remain high and there could be problems in meeting supply needs. In some cases products may not even be able to reach the market,"​ said a spokesperson from the National Confectioners Association (NCA).

Sugar is one of the few commodities to still be subject to import quotas, meaning it cannot automatically enter the US market. In recent months the USDA has responded to industry concerns by allowing for an increase in domestic and imported sugar supplies.

However, more imports are needed in order to avoid a continued "desperate scrambling for available supplies,"​ said the association, which is calling for an increase of 1 million tons.

"It is not in the long-term interest of any part of the sugar industry- producers, refiners or industrial users- to have continued market instability of the kind we've experienced in recent months,"​ said NCA president Larry Graham in a statement.

Related topics: Ingredients

Related news