Get the Scoop on Sugar

(IngredientNews Staff) – At International Food Products May 26^th Sugar Scoop webinar, International Food Products Sugar Trader Bill Holtgrieve discussed the current sugar market, the Mexican anti-dumping tentative agreement and 2016 demand and pricing. To find out more, here’s our recap. Or, if you’d like, you can view a recording of the webinar here.

The current sugar market is priced at between $0.3450 – $0.3850 per lb bulk basis, minus freight and other costs. This is dependent on volume and geography, with beet sugar on the lower end and cane sugar on the higher end. Similar pricing is available for 2016.

Currently, we’ve seen recent softness with pressure on cane refiners taking accelerated T.R.Q. sugar and some Mexican deliveries. The beet crop is pretty much sold for the crop year, and we don’t see further significant weakness. We believe there is a 50% chance or higher for a price increase mid-year as beets get sold.

In regards to the Mexican trade dispute, U.S. growers filed suit accusing Mexico of subsidizing sugar. The Department of Commerce/International Trade Commission agreed and said that the US has the right to impose prohibitive duties on sugar. And through the D.O.C./I.T.C., U.S. growers and Mexico hammered out a “Suspension Agreement” with various complex mechanisms.

The agreement with Mexico won’t mean a flood of cheap sugar. And the bottom line is, the agreement sets a floor for Mexican sugar at about $.3300 per lb. There is no incentive for the tariff-rate quota to come in much less than the Mexican equivalent. The market is likely to have a floor in the low $.30 bulk basis and will be flatter and less volatile. The beet crop will determine the magnitude of Mexican imports. Beets are “scale up sellers,” and the early bird will get the worm.

Bill Holtgrieve’s opinion and recommendation:

For the balance of the ‘14/’15 crop year, look to take advantage of current prices and take whatever softness there might be. Get at least 80% covered since there is limited downside. Now that the Mexican situation is settled, start taking a serious look at getting some coverage for the ‘15/’16 crop year/calendar year in the mid $0.30s.