US sugar industry says imports not cost effective

Importing sugar into the United States would not be cost effective because there is now little difference between the world price and the price in the US domestic market, industry officials said Wednesday. US food companies are clamouring for more sugar imports, warning the country could "virtually run out of sugar" unless the Obama administration eased import curbs.
But the analysts said imports make little economic sense. John Sheptor, president and chief executive of Imperial Sugar, told Reuters in a recent interview that freight costs would get in the way of importing sugar economically. "Not only (do I) have to cover the price of the No 11, but (I have to account for) the 2.0 to 3.0 cents premium for freight," he said. Imperial is the biggest sugar producer in the United States.
The price of world raw sugar is determined in the world No 11 sugar market on ICE Futures US while American domestic sugar prices are set by the ICE No 16 domestic sugar market. The No 11 futures hit a 28-1/2 year peak at 23.33 US cents per lb on Wednesday. Domestic No 16 sugar saw its spot month end Wednesday at 26.95 cents, a differential of 3.0 to 4.0 cents that would be negated by shipping and storage.
In years past, the differential would range from anywhere from 8 to 10 cents. Prices in the world sugar market have exploded higher due to expectations of significant imports from No 1 consumer India. Jack Roney, director of economics and policy analysis at industry and producers' group American Sugar Alliance, said US food companies would not benefit from the discount usually seen in No 11 sugar prices because of its "convergence" with the No 16 market.
The Sweetener Users Association, which groups American con-fectionary companies and bakeries among others, contends that industrial users use refined and not raw sugar. The price of refined sugar now stands at 35 cents, which they said is "far above historic norms." "The risk of disruption from a hurricane or other adverse weather is worrisome to food and beverage manufacturers that rely on an assured supply of sugar," the Sweetener Users said.