The Sugar Beat
Sugar Price Freefall
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He evacuated his family and headed to drier grounds before Gustav blew in. Like most of his neighbors, he was eager to return after the storm to survey damage and see what was left of his home. But unlike many of his neighbors who are not farmers, he had a particular urgency to return. Dickie’s sugarcane crop was still in the ground, and every day it remained there was money lost. Unfortunately for Dickie, Gustav left a lot of his crop under water and flattened, making it impossible to harvest in a timely manner. Dickie had to wait for the sun to shine to dry up the water and help the cane stand back up. The sun didn’t stay long, as warm rays gave way to more water and more wind from Hurricane Ike, which came ashore just two weeks later. “We’ve really had a string of bad luck lately,” he said. “This year had so much promise; the crop was good; sugar content was up in the cane; then just a few days before harvest we get back-to-back storms.” When Dickie finally got into the fields—nearly three weeks later than normal—his worst fears were realized. “As Louisianans were harvesting, our prices were plummeting,” he explained. “At the same time, our input costs were climbing. I’m literally losing money with every pass of my combine.” Despite crop damage in Louisiana and parts of Texas, which were also hit with heavy rains and wind, U.S. sugar supplies were growing. This has forced raw sugar prices to fall nearly 10% in the past month. Market analysts attribute this price freefall to an August decision by the U.S. Department of Agriculture to import additional subsidized foreign sugar, a move that the sugar industry called “premature” at the time. “The USDA’s actions today cast a cloud over a sugar industry that has been dealing with depressed prices and soaring input costs for some time,” the American Sugar Alliance said in a statement about the August action. “Today’s announcement is a reaction to a USDA forecast of what the sugar market will look like 14 months from now, and the USDA’s estimates often swing wildly from month to month.” And that’s exactly what has happened. Earlier this month, the USDA changed its estimates and is now forecasting 200,000 tons of additional beet sugar on the market. Many in the industry expect these numbers to grow even more as sugarbeets are harvested in the Midwest and Louisiana finishes its season. Being right in August is no consolation for farmers like Dickie, whose input costs have increased even more as a result of hurricane damage, adding to the current financial squeeze. “Harvesting twisted cane…requires farmers to slow the harvesters down, which increases fuel costs and time requirements for each acre harvested,” explained Jim Simon of the American Sugar Cane League. Dickie is unsure what the rest of the season will bring, but he remains sure of one thing: if the USDA takes further measures to depress prices even more, it will likely be the death knell for many Louisiana farmers struggling to get back on their feet. “If I could tell the USDA one thing, it would be to take a deep breath and let the market take shape a little before allowing more foreign sugar in,” he concluded. “This is what the new Farm Bill mandates, and I’m hopeful that they will follow Congress’ directives.” |
Audio & Video
Jack Roney on Fox Business
Factors Driving the Sugar Market: Jack Roney of the American Sugar Alliance on the commodity's banner year last year and where prices are headed.
American Crystal Sugar Company
American Crystal Sugar Company is a world-class agricultural cooperative specializing in the production of sugar and related agri-products.
RGVSG Chairman Dale Murden on the upcoming Farm Bill
Members of the House Agriculture Committee are traveling the country to hear from producers about the upcoming Farm Bill. Rio Grande Valley Sugar Growers Chairman and cane grower Dale Murden discusses the sugar provisions he hopes will be included in the 2012 Farm Bill.