DOC raises Mexican sugar export limit

WASHINGTON – At the written request of the U.S. Department of Agriculture, the U.S. Department of Commerce announced on April 29 an increase in the amount of raw sugar Mexico can export to the United States during the United States marketing year. course, which ends September 30.

In its letter to the DOC, the USDA stated that it “has identified a need for additional supply of sugar in the U.S. market and hereby requests that the Department of Commerce increase no later than April 29, 2022, the limit Mexico’s export license for fiscal year 2022 of 170,000 short tons, gross value, of “other” sugar pursuant to section VB4.c” of the agreement suspending the countervailing duty investigation on sugar in from Mexico, as amended on January 15, 2020 (CVD agreement).” The USDA in its letter also stated that “consistent with the definition of other sugar in the CVD agreement, the additional sugar must have a lower polarity at 99.2 (degrees), as produced and measured on a dry basis”. This is below the polarity for sugar to be classified as refined sugar, and is therefore considered raw sugar which must be further refined before being delivered to US users.

On November 23, 2021, the DOC also increased Mexico’s export limit for other sugars by 150,000 short tons. The revised export limit for Mexico for the current marketing year (October 1, 2021-September 30, 2022) is now 1,207,400 short tons, gross value. Since the November 23 and April 29 export limit increases were specifically aimed at other (raw) sugars, the amount of refined sugar that can be exported to the United States from Mexico this marketing year remains at 266,220. short tons, gross value (30% of the original export limit of 887,400 short tons, gross value, set last year).

The government of Mexico has indicated that it can and will supply the additional 170,000 tons of other sugar, just as it had the initial increase of 150,000 tons, which was to enter the United States by March 31, 2022. The DOC acts to raise export limit on or after April 1 only after both requirements – a written request from the USDA for additional sugar and confirmation from Mexico that it can and will supply the increase – are met. .

The Office of the United States Trade Representative announced on April 15 the reallocation of 201,551 tonnes (approximately 222,172 short tons) of unused country-specific quota allocations under the tariff rate quota on imported raw cane sugar for 2021 -22. The change shifted in-quota imports from countries that indicated they could not fill their 2021-2022 quota allocations to those that indicated they had additional sugar to export to the United States. Most of the reallocation would offset in-quota exports from the Philippines which, due to declining domestic production, has earmarked its entire sugar supply for domestic use and has indicated that it will not ship any their 142,160 tonnes (about 156,704 short tons) Tariff quota allocation for the current marketing year. It was unclear how much of the reallocation would actually go to the US, as there is still some level of underperformance from exporting countries.

U.S. sugar supply has tightened significantly since February, when the stocks-to-use ratio at the end of 2021-22 was forecast at 14.7% by the USDA in its sugar estimates report. global agricultural supply and demand. The ratio was lowered to 13.6% in March and 12.5% ​​in April, below the USDA’s traditional target range of 13.5% to 15.5% that indicates sugar supplies adequate. From February to April, the USDA’s forecast for domestic sugar production was lowered by 133,000 tonnes, or 1.4%, imports increased by 46,000 tonnes, or 1.5%, and deliveries increased by 166,000 tonnes, or 1.3%, with a net reduction of approximately 250,000 tonnes, or 14%, in forecast ending sugar stocks for 2021-22.

Michigan Sugar Co.’s declaration of force majeure in early April also tightened supply in April (and was only partially explained by the USDA forecast domestic sugar production cut in WASDE) , which removed approximately 50,000 short tons of refined beet sugar. of the market. Michigan Sugar said it would not ship 25% of its contract sugar to all customers between April 1 and September 30.

Spot sugar prices, meanwhile, soared. Spot beet sugar is not available as all supplies from the 2021 beet crop were contracted some time ago. Refined cane sugar is offered at 58¢ a pound fob, the highest in 11 years.

Rachel J. Bradford