USDA sugar forecasts fall further, industry calls for imports

By Lorraine Heller

- Last updated on GMT

Related tags Usda Free trade Sugar

With the nation's sugar supplies still low, manufacturers of
products that use sugar have again appealed to the US Department of
Agriculture (USDA) to allow for extra imports in order to avoid
shortages on the market.

According to the USDA's latest World Agricultural Supply and Demand Estimates (WASDE), ending stocks for US sugar supplies for 2005-2006 are set at 1.3 million tons, or 12.7 percent of use. This is 75,000 tons lower than last month's estimates.

And according to the Sweetener Users Association (SUA), this will not be enough to meet manufacturers' needs.

In a letter sent this week by SUA president Randy Green to the USDA, the association calls for an increase in ending stock levels to 1.6 million tons, what it considers to be an "eminently reasonable"​ goal that is "consistent with those years when supplies have not been in massive surplus, and is substantially below the simple average long-term level of stocks."

This year has been a particularly tight one for sugar because of the combined effects of hurricane damage to sugarcane crops, a delayed sugar beet harvest, serious transportation problems and the temporary closure of a major sugar refinery, which all severely restricted the nation's sugar supply.

Indeed, although the hurricane-damaged factory in Louisiana is now up and running again, the USDA says that lower sugar production in Florida and Hawaii "more than offsets"​ the increased production from Louisiana.

Last month the USDA announced it was to allow 450,000 tons extra sugar imports into the country, yet the SUA had previously called for an extra one million tons, more than twice the amount conceded to by the USDA.

"The situation is clearly better than in the immediate aftermath to the hurricane. We are happy the USDA allowed more imports and that the refinery is running again. That's the good news. The bad news is that as the year moves on and the market remains tight, it will be absolutely necessary for the USDA to allow more imports in order to preserve an orderly market and adequate supply,"​ Green told

Sugar is one of the few commodities to still be subject to import quotas, meaning it cannot automatically enter the US market.

In his letter to the USDA, Green said that "current USDA projections rely on substantial quantities of second-tier imports from Mexico, but so far Mexican production is lagging last year substantially. To rely on these imports as a substitute for a further tariff rate quota (TRQ) increase is to take risks with supply adequacy during the remainder of this year."

"USDA projections also assume quota imports under the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA), but these imports are also uncertain because of delays in implementing the agreement,"​ he added.

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