Will tweaking Mexico sugar import mix reassure U.S. market?
On the same day, Mar. 10, that USDA published a forecast for U.S. sugar stocks-to-use (STU) at 7.2 percent—for those keeping score at home, just a bit over half of the target STU of 13.5 percent—the agency is already taking some steps to reassure the market and address concerns by industrial sugar users.
USDA figures published today for 2019/20 cut expected domestic beet sugar production by around 127,000 short tons raw value (STRV) and U.S. imports of Mexican sugar by some 552,000 STRV.
In a press release, USDA announced that it was notifying the Dept. of Commerce (DoC) of the need for an additional 200,000 STRV of refined sugar imports for 2019/20. Following guidelines under the U.S.-Mexico Suspension Agreements, DoC subsequently raised Mexico’s refined import quota by 200,000 STRV.
The announcement noted that this does not affect Mexico’s total quota but merely shifts volume from non-refined to refined, as was the case with a November 2019 increase of 100,000 STRV in Mexico’s refined quota. Given all this, those asking USDA to do more to ensure the sugar supply—calls made by sugar users and more recently by a bipartisan group of senators—may not be mollified by today’s announcement.
The quota shift could allow Mexico to ship raw and refined sugar with polarity (pol) above 99.2. Mexico’s industry has had some difficulties producing this lower pol sugar, and availability may have been particularly challenged by its poor 2019/20 crop.
Per existing guidelines, USDA could announce other moves to increase imports from other trading partners, but not until Apr. 1.
Cumulative U.S. monthly imports of sugar from Mexico
Source: USDA, U.S. Census Bureau, McKeany-Flavell
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