US sugar imports to rise

The United States, which historically has limited sugar imports to a minimum required under trade agreements, will start boosting imports of the sweetener as domestic output stays flat while consumption climbs. Normally, the United States allows sugar imports of 1.257 million short tons (1.140 million tonnes) in a fiscal year (October-September), an amount that is part of its commitment to the World Trade Organisation.
Another 120,000 short tons (108,862 tonnes) comes in under the Central American Free Trade Agreement. But for the second season running, those imports are not enough for one of the world's biggest sweetener markets. And Mexico, another key source of US imports, expects a big shortfall in its sugar crop this season.
That would force the United States to ask countries taking part in its sugar program to increase their supplies. Failing that, US processors must buy sugar in the world market, which may drive prices higher. US sugar production has trended down the past few years while consumption has gone up, said Jack Roney, director of economics for the American Sugar Alliance (ASA) which groups American sugar producers.
"The US is importing a larger share of its needs than it used to," Roney told Reuters in an interview. "Unless we have great weather and high production, and/or a drop off in consumption, I expect we will need more imports than the WTO minimum for the next year or two at least," he said.
In 2008-09, the US Agriculture Department allowed imports of 300,000 short tons (272,155 tonnes) after a fire at a sugar refinery in Georgia knocked out a month's worth of supplies. In 2009-10, the sweetener trade here estimates sugar imports of 1.0 million short tons (907,184 tonnes) will be needed to meet the shortfall in the US sugar market.
According to data from the US Agriculture Department, US sugar output hit a 30-year top at 9.032 million short tons in 1999-2000. Since then, production has not exceeded 8.8 million short tons (7.98 million tonnes) and output in 2009-10 was forecast at 7.942 million short tons (7.204 million tonnes).
US law requires American food and beverage firms to buy their sugar from domestic sources. If supplies are short and the sugar allowed in under trade deals is not enough, the farm law allows the US Agriculture Department to approve imports. Roney said the United States cannot expand production very quickly because "existing cane mills and beet factories are ... running at or near capacity."
"We will likely import sugar beyond the 'minimum import quota'," added Patrick Henneberry, senior vice-president for commodities management and sales at Imperial Sugar, one of the top sugar producers in the country. "During 1998-99 (to) 2004-05, (sugar) imports most years were at the WTO minimum. Total imports averaged about 18 percent of total use and the market was oversupplied most of those years. Since the hurricane year of 2005/06, however, imports have averaged about 26 percent of use," said Roney.
GAP TO BE FILLED BY MEXICO, SOMETIMES Mexico, which under the North American Free Trade Agreement can export sugar to its northern neighbour with virtually no restrictions, would normally fill any gap in US sugar supply. But Mexico's sugar crop is expected to fall short in the 2009/10 season due to bad weather and ageing cane fields.