USDA raises US sugar imports, prices rise

The US Agriculture Department said on Monday it will increase sugar imports in fiscal 2011, giving the raw sugar market a mild boost as the trade mulled where the sweetener would come from. The USDA said the extra imports will offset domestic sugar cane lost in Florida in January, when a hard freeze hit the state. The key May raw sugar contract on ICE Futures US gained 0.54 cent to trade at 26.20 cents per lb at 10:20 am EDT (1420 GMT) on Monday.
"That why we (went) up," said Mike McDougall, vice president of brokerage Newedge in New York. An annual sugar import program run by the USDA was increased to 1,556,497 short tons (1.41 million tonnes) for fiscal 2011 by reassigning 325,000 short tons (294,835 tonnes) originally allocated to domestic producers to countries exporting sugar to the United States.
Foodmakers grappling with high prices have pressured the government to boost sugar imports, and foreign growers have also pushed for more access. For details. The US sugar program attempts to balance imports with consumption and domestic production so that growers receive a minimum price at no net cost to farmers. Under the law, the USDA must wait until April before adjusting its import quota.
Traders said Mexico will probably supply a chunk of the sugar, especially since the country will export a record 1.3 million tonnes in 2010/11 due to strong demand from the United States. They said some of the TRQ countries may not be in a position to supply the sugar. New-crop Brazilian sugar and Australian sugar may be sources for some of the sweetener. "It's going to come from all over the place," one trader said. The approximately two dozen TRQ countries are permitted to export sugar to the US domestic market, which enjoys a premium over world sugar prices.
Last Friday, the USDA's monthly production report said the key stocks-to-use ratio in the US sugar market fell to 10.4 percent, unchanged from last month, but below the 15 percent level the USDA prefers. The United States consumes about 10 million short tons (9.071 million tonnes) of sugar annually, with imports accounting for one-quarter of the total. The US and Mexico account for the biggest sweetener markets in the world, according to trade sources.