For the East coast flatlanders it has been a stormy, wet spring and summer. Sugar shortages loomed in the United States and Mexico. But the weak peso and low sugar prices in Mexico produced a surge in imports of Mexican sugar into the United States that surprised government regulators on both sides of the border as well as market participants.

The American Sugar Alliance’s (A.S.A.) 26th International Sweetener Symposium took place at the Canyons Resort in Park City, Utah, from Aug. 1-5.

Many looked at the symposium as an opportunity to reassess where the North American Free Tree Agreement (NAFTA) region stood in the supply-demand equation and in relation to a seemingly tight world sugar market.

Mexico was said to be working on an approximately 400,000-tonne import program, but with world supplies tight it was not immediately clear from where the near-term sugar would come. It was clear that more high-fructose corn syrup would be moved to Mexico in the future.

For those enjoying the fresh Utah air, the real secret is that no one is sure of a number of factors. Among them:

• How much sugar — standard and refined — is actually in inventories in Mexico?

• How much have the government-owned mills actually committed to the United States?

• What will be the sugar demand in the United States and Mexico over the next 6 to 12 months?

• Will Mexican production improve over this year’s disappointing shortfall?

• How much HFCS will become a part of the soft drink supply chain in Mexico?

It appears that the major U.S. soft drink companies are prepared to play a more active role in HFCS supply for their Mexican bottlers.

What we do know is that Mexican and U.S. government authorities are cooperating much more closely on a range of market management issues.

Barb Fesco of the U.S. Department of Agriculture in her presentation pointed to a number of factors impacting U.S.D.A. decisions.

• New farm bill

• Savannah explosion

• Sweetener free trade with Mexico

• New U.S.D.A. undersecretary of agriculture

• Looming tight supplies in NAFTA and the world.

Clearly the confusion in the markets was reflected in the World Agricultural Supply and Demand Estimates (WASDE) projections as analysts grappled with the new reality of two inventories — from Mexican and U.S. supply sources. It was essential that these issues had to be resolved and that the old methodologies were inadequate for the task. But the challenge remains real. For the moment the United States seems willing to stand pat on tariff-rate quota increases.

One reason the U.S.D.A. is loath to take on extra sugar is it cannot be simply resold in the marketplace, which the new farm bill makes more difficult.

There is also an interest in seeing how the Mexican import program will work and if a combination of more U.S. HFCS in Mexico and some sugar imports will alleviate potential shortages in the U.S. and Mexican markets.

In the penultimate slide of Ms. Fesco’s presentation she asks a key question that is facing all market participants private and government: "Are traditional ending stock levels still relevant given NAFTA?"

Perhaps in the mountains of Utah is the best place to contemplate an answer to that question and where the NAFTA sweetener region is going over the next year.

This article can also be found in the digital edition of Milling and Baking News, August 11, 2009, starting on Page 28. Click

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