Milling & Baking News - December 3, 2019 - 12

Exports and Trade Issues

Refined sugar import allowance
from Mexico increased

Continued from Page 1

increase in a Nov. 22 letter to the D.O.C.
The A.B.A., in a letter to U.S.D.A.
Secretary of Agriculture Sonny Perdue,
outlined the "crucial need for a consistent source of refined sugar for production and market demand following
abysmal sugar beet and sugar cane
crop yields." The A.B.A. confirmed the
amount of sugar was adequate for the
industry while the U.S.D.A. continued
to monitor the market.
"Large and especially smaller family bakers need immediate access to refined sugar," said Lee Sanders, senior
vice-president at the A.B.A. "They do
not have the ability to freely seek out
alternative supplies abroad."
The S.U.A. commended the U.S.D.A.
and the D.O.C. for the action.
"Bolstering the supply of refined

Agricultural Act of 2018, U.S. sugar
may make up no more than 85% of estimated total U.S. sugar needs as projected by the U.S.D.A. The remainder
comes from imports that are controlled
by tariff-rate quotas, free trade agreements and a trade agreement with
Mexico, the latter of which accounts
for about 8% of total U.S. sugar supply
and about 35% of total imports.
Changes in sugar imports from
Mexico must come from the D.O.C.
under the Agreement Suspending the
Countervailing Duty Investigation on
Sugar from Mexico, which was signed
by both countries in 2014 and amended in 2017. Under the agreements, the
D.O.C. sets the total export limit for
Mexico based on U.S. needs as calculated in the U.S.D.A.'s WASDE report. Among other requirements, the

U.S. beet and cane sugar production

2009-10

2011-12

2013-14

Source: U.S. Department of Agriculture

sugar in the United States will help
support U.S. food and beverage manufacturers in producing sugar-containing products that American consumers enjoy," the S.U.A. said. "While the
increase by 100,000 short tons is a step
in the right direction, we know both
departments understand that the U.S.
sugar market requires a significantly
larger boost in supplies. According
to the U.S.-Mexico suspension agreements, that further increase will take
place in December, when Mexico will
receive additional U.S. sugar market
access. Today's decision will allow for
a greater percentage of refined sugar
imports than would otherwise be the
case - a decision we feel is appropriate given the circumstances."
Vincent O'Rourke, an analyst with
Czarnikow Group Ltd., said the import increase will accelerate the supply of refined sugar into the U.S. market because it bypasses the refining
process, but "more imports will definitely be required this season."
Under the U.S. sugar program in the
12 / December 3, 2019

Milling & Baking News

2015-16

Beet

2017-18

4,588
4,024

Cane

4,937
4,057

5,279
4,014

5,103
3,866

5,119
3,870

4,893
3,763

4,794
3,667

5,076
3,905

4,900
3,588

4,659
3,172

4,575
3,387

in 1,000 short tons, raw value

2019-20*
*forecast

amended agreements set the import
limit at 30% for refined sugar (99.2 polarity and above) and 70% for "other"
sugar, which is basically raw sugar
that goes to U.S. cane refiners. The
shipping pattern restrictions on sugar
imports from Mexico, which define
dates that specific percentages of imports may be shipped, do not apply to
the additional refined sugar imports,
the U.S.D.A. said.
The D.O.C. on Sept. 20 set Mexico's
export limit at 782,530 short tons, raw
value, consisting of 30% refined sugar
(234,759 tons) and 70% "other" sugar
(547,771 tons), effective Oct. 1, 2019,
through Sept. 30, 2020. The additional
sugar boosts Mexico's export limit to
882,530 short tons, the D.O.C. said. Refined sugar may account for no more
than 334,759 tons of the total export limit (original 30% of 235,750 tons plus the
100,000 tons additional) with the "other" sugar imports unchanged at 547,771
tons. Of course those amounts will
change if the U.S.D.A. adjusts Mexico's
export limit in the December WASDE.

Trade sources said they fully expect
the U.S.D.A. will further increase Mexico's total export limit in December to
bring the 2019-20 U.S. ending stocksto-use ratio up to 13.5%, as required
in the U.S.-Mexico suspension agreements, from 10.5% in November. The
ratio was 14.5% in 2018-19 and 16.1%
in 2017-18. Some also expect further
increases in refined sugar imports to
be announced before the March 2020
WASDE. Although Mexico's sugar
production is forecast lower this year
due to drought, there is consensus that
it will be adequate to meet the additional U.S. needs. The U.S.D.A. also
has the option to increase tariff-rate
quotas if Mexico says it cannot meet
the additional needs request.
Part of the issue is U.S. refining capacity and the short-term need for
refined sugar. It's doubtful that U.S.
cane refining capacity is sufficient to
handle a significant increase in raw
sugar imports, depending on timing
of the imports. By increasing refined
sugar imports, the sugar goes to distributors and/or directly to end users.
Two major U.S. beet sugar sellers
declared force majeure on Nov. 15 after the U.S.D.A. confirmed the drastic
reduction in beet sugar production.
United Sugars Corp. said it would reduce deliveries by 18%, and the Western Sugar Cooperative said it would
cut deliveries by 15%, both from
January through September 2020. In
both cases, full deliveries were available during the current quarter, so the
greatest beet sugar supply tightness
can be expected after Jan. 1, 2020. Imports from Mexico typically peak in
the March-May period after Mexico's
cane harvest gains momentum after
the first of the year.
The U.S.D.A. on Nov. 8 forecast U.S.
2019-20 sugar production at 8,612,000
tons, down 6% from October, including beet sugar at 4,588,000 tons, down
9%, and cane sugar at 4,024,000 tons,
down 2.5%. Total production was forecast down 4.2% from 2018-19, with beet
down 7% and cane down 0.8%. The
worst losses for beet sugar were in the
top producing Red River Valley, where
about 145,000 acres of sugar beets went
unharvested. In its Nov. 8 Crop Production report, the U.S.D.A. lowered sugar
beet production in top-producing Minnesota by 22% from October and 15%
from 2018 and in No. 3 North Dakota
by 29% from October and 27% from last
year. U.S beet sugar production would
be the lowest since 2009, with total production the lowest since 2013, although
further reductions are expected. MBN
bakingbusiness.com / world-grain.com

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Milling & Baking News - December 3, 2019

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