From the International Sweetener Symposium:
Coeur d’Alene, Idaho – U.S. sugar prices have fallen while prices on the world market are rapidly rising, taking a key argument away from opponents of U.S. sugar policy who have long complained about not having more access to heavily subsidized foreign supplies.
The topic was a point of emphasis at today’s International Sweetener Symposium, where sugar experts discussed the convergence of the markets.
“U.S. sugar prices are down 21 percent over the past year,” said Jack Roney, an economist with the American Sugar Alliance, who said that strong yields combined with unneeded refined imports are largely to blame. “U.S. food manufacturers are paying less for sugar today than they did when Jimmy Carter sat in the White House.”
On the other hand, global sugar prices are on a tear, more than doubling since last September.
“This kind of volatility on the global market is not that uncommon,” explained Roney. “This dump market is prone to periods of extreme shortages and peaks because it is largely comprised of leftover sugar that foreign producers heavily subsidize to ship abroad.”
Such subsidization and unreliability, he said, underscore the importance of U.S. sugar policy.
“We have some ups and downs, but America’s no-cost sugar policy helps round off the extremes and keeps things far more consistent,” he said.
Roney added that it is now cheaper for wholesale buyers to source sugar domestically than it is to import subsidized sugar from abroad. According to the most current U.S. Department of Agriculture pricing data, U.S. refined sugar costs 29.75 cents per pound, compared to 29.96 cents for foreign sugar once shipping costs are included.
Toby Cohen, a sugar market analyst from London, attributed much of the recent rise in global prices to poor crops, bad weather, Brazil’s strengthening currency, and the emergence of speculators into the market.
“Today, the world sugar market has inflows of spec capital and spec demand for futures contracts on a previously unseen scale,” said Cohen, who is a vice president with American Sugar Refining. “Commodity hedge funds are now the largest buyers of sugar, which is leading to more volatility.”
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