Sugar Prices Got Sweeter for Consumers In October

(Wall Street Journal) – Bakers, start your ovens. The price consumers paid for sugar fell the most on record last month, Labor Department data showed Thursday.

The consumer price index’s measure for sugar and artificial sweeteners tumbled 2.2% in October and is down 3.8% from a year earlier. That bucked overall trends for food prices, which are up 3.1% from a year ago, and overall consumer costs, which rose 1.7%.

Separate U.S. Department of Agriculture data show retail refined sugar prices in the third quarter of this year fell to a little over 60 cents a pound, the lowest quarterly figure since 2009.

The sweet reprieve for consumers comes amid uncertainty over sugar imports, which are a potential boon for sweets makers but bad news for domestic sugar producers.

“The U.S. producer price for sugar has fallen dramatically,” said Jack Roney, economist at the American Sugar Alliance, a trade group for U.S. producers. “That is mainly because we’ve been flooded with subsidized and dumped Mexican sugar.”

U.S. producers filed a claim at the Department of Commerce in March arguing that the Mexican government subsidizes the domestic industry and in August the U.S. government imposed preliminary tariffs on imports.

Another round of penalties followed last month but rather than risk a trade war, the U.S. and Mexico struck a deal that would halt duties in return for minimum prices and other provisions limiting Mexican exports to the U.S. If the final agreements are signed, Commerce would suspend its investigations and the U.S. would refund earlier payments. The agency is still collecting industry feedback and the agreement won’t be signed before Nov. 26.

Producer prices stabilized with the trade case, Mr. Roney said, though with the deal still unfinished the next step for prices remains uncertain.

“All eyes are on what the governments do,” Mr. Roney said.