U.S.D.A. says sugar forfeitures not expected in 2016

by Ron Sterk
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Beet sugar
Beet sugar prices have dropped to within a few cents of forfeiture levels.

COEUR D’ALENE, IDAHO — Although beet sugar prices have dropped to within a few cents of forfeiture levels, the head of the U.S. Department of Agriculture’s sugar program said she does not anticipate forfeitures against the government’s loan program this year.

Barbara Fesco, director of the Farm Service Agency’s Dairy and Sweetener Analysis of the U.S.D.A.
Barbara Fesco, director of the Farm Service Agency’s Dairy and Sweetener Analysis of the U.S.D.A.

“I do not foresee forfeitures,” said Barbara Fesco, director of the Farm Service Agency’s Dairy and Sweetener Analysis of the U.S.D.A., in response to a question at the International Sweetener Symposium in Coeur D’Alene on Aug. 1. She said she expects beet sugar stocks will decline as processors work through 2016 supply.

Some beet processors at the Symposium indicated they likely would carry unsold 2015-16 refined beet sugar into 2016-17, which begins Oct. 1. Beet processors and domestic cane refiners are allocated specific amounts of refined sugar they can sell each fiscal year under the U.S.D.A. sugar program.

This year’s sugar market has been complicated by tight raw cane sugar supplies, with strong sales by cane refiners in the first half of the year during which there was increased demand for non-bioengineered cane sugar ahead of the July 1 Vermont law requiring labeling of G.M.O. ingredients. Also contributing was a larger-than-expected share of sugar imports from Mexico bypassing traditional U.S. refiners (who melt and produce crystalized sugar) and going to those who melt sugar only for direct use. As a result, cane refiners who depend on imported raw sugar have faced tight supplies, even if actual refined sugar supplies, both beet and cane, are adequate, or in the case of beet, somewhat ample, which has led to talk of forfeitures for only the second time in more than a decade.

“It (forfeitures) might be a dangerous thing to do,” Ms. Fesco said. “It would complicate things very much.” During her presentation at the Symposium, she addressed this year’s trends of increasing cane sugar deliveries (use) and decreasing beet sugar deliveries, which have contributed to higher refined cane sugar prices, lower beet sugar prices and excess supply of beet sugar. Data in the last couple of months, though, suggest those trends are slowing, with sales of beet sugar increasing due to its sharp discount to cane, and strong sales of cane slowing as the result of high prices and lessening concern about the G.M.O. labeling issue. Beet sugar is almost entirely from bioengineered seed while cane sugar is non-G.M.O.

In an effort to ease the tightness, the U.S.D.A. raised sugar import quotas earlier this year. Further, the U.S. Department of Commerce, which oversees sugar imports from Mexico under the Dec. 19, 2014, Countervailing Duty Suspension Agreement between the two countries, has been negotiating with Mexico in an effort to increase the amount of raw sugar imports from Mexico going to U.S. cane refiners. The issue is delicate, with the United States holding the upper hand after Mexico was found in 2014 to have dumped subsidized sugar on the U.S. market, but with Mexico said to be threatening retaliation in the form of reduced imports of high-fructose corn syrup and other products should the new terms of the suspension agreement not be acceptable to them.

The symposium is sponsored by the American Sugar Alliance, which represents the interests of U.S. sugar producers. 

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