US Manufacturers Want Access To More Foreign Sugar

NEW ORLEANS --U.S. food companies have asked officials in Washington to authorize additional sugar imports soon to ease tightness attributed to Imperial Sugar Co.'s (IPSU) Georgia refinery explosion in February and to an expected smaller U.S. beet crop this fall.

Growers, however, want the U.S. Department of Agriculture to wait until the sizes of the nation's beet and cane crops, being harvested now, are known before making any decision.

Christy Moran, spokeswoman for the Sweetener Users Association in Washington, said, "food and beverage companies are paying 40 cents per pound for refined sugar this fall, up 60% from about 25 cents a year ago." U.S. refined prices climbed in 2007 and refinery owners hiked prices for customers this past summer.

SUA, representing candy, beverage, ice cream and other manufacturers, asked USDA to set its tariff-rate quota controlling raw-sugar imports for fiscal year 2009, which began in October, "at well above minimum levels required under World Trade Organization rules," Moran said. The U.S. government regulates the size of domestic sugar supplies to meet demand through restrictions on imports and on amounts growers can sell.

The agency decided on a raw-sugar tariff-rate quota, or TRQ, of 1.231 million short tons for fiscal 2009, which is the WTO minimum that was agreed on as nations addressed trade distortions.

"USDA's own statistics have projected record-low U.S. ending stocks of sugar, and it's clear to everyone that the U.S. will have to import at least a million tons more than is currently authorized," Moran said. "With beet sugar supplies down almost 20% from last year, cane sugar refiners will have to operate at close to 100% of capacity all year to meet demand." She said refiners can't work at full tilt, however, without access to more raw sugar.

In early October, USDA said the new beet crop should be down 11.5% on the year and forecast the nation's sugar stocks-to-use ratio for the season ending in September 2009 at a modest 6% versus 13.8% in September 2008. As an industry rule of thumb, a stocks-to-use ratio of at least 15% is considered a necessary cushion in case of calamity, such as flooding or a fire.

"USDA needs to increase import quotas as soon as possible," Moran said. If the agency waits, refined sugar would have to be rushed in later at the expense of raws, which have a value-added component for U.S. refiners.

Judy Sanchez, spokeswoman for U.S. Sugar Corp., growers and refiners in Clewiston, Fla., disagreed with an urgent need to allow more sugar in, saying, "with cane and beet harvests just beginning and final domestic crop size uncertain, we believe it's premature for the Sweetener Users Association to claim the need for such large, additional imports."

USDA last month said the domestic market will require additional supplies of sugar during FY09. The agency said it intends to monitor stocks, consumption, imports and other variables, and that adjustments will be made to sugar-program parameters if needed.

Last week, USDA Undersecretary Mark Keenum said the agency will probably have to let in more sugar, but added it was too early to say when or how much.

Imperial Fire, Low Beet Plantings, Hurricanes Lifted Prices

Refined prices have risen this year because of Imperial's Savannah plant explosion in February and because growers sowed fewer beets and more grains this spring, which seemed prudent at the time, said Ron Sterk of Milling & Baking News, which tracks ingredient prices. "Beet yields are turning out better than expected, but that's not enough to offset lost acres, and trade sources indicate that sugar extraction, or content, from beets is down," he said.

U.S. Midwest beet sugar was fetching 35 to 40 cents a pound Friday, while refined cane was quoted at 35.40 cents, according to Sterk. "Those prices are FOB so you add shipping costs on top of them," he said. Midwest beet sugar peaked at 40-45 cents in the first week of August.

USDA in early August raised the fiscal 2008 TRQ for refined sugar to 394,251 short tons, raw value, from 94,251 tons, and said the extra sugar must be brought in by Dec. 31. Days before that announcement, U.S. refiners had hiked prices to industrial customers.

United Sugars - a conglomerate including American Crystal Sugar, Minn-Dak Farmers Cooperative and U.S. Sugar Corp. in Florida - in early August boosted bulk prices to $45 a hundredweight FOB, from $40, extending through September 2009. Domino Foods Inc. increased prices to $40 per hundredweight in late July.

On the user side, Hershey Co. (HSY) in August announced candy-price increases, saying sugar, corn sweetener, cocoa and peanut costs had risen 20%-45% since the start of the year.

U.S. refined cane sugar prices peaked at 40-45 cents in the first week of September, when Hurricane Gustav struck Louisiana fields, Sterk said. Not long after that, Hurricane Ike also hammered the Louisiana crop.

Meanwhile, 50% to 60% of the nation's new beet crop is already sold, Sterk said. Refined prices were expected to hold strong in the final quarter of 2008, but softened a bit in mid-October, "reflecting ongoing imports and slow domestic sales," he said. "While some beet and cane processors have dropped prices by about a nickel a pound recently, others are holding near the 40-cent level."
source:alibaba