USDA Supports Domestic Sugar Producers

The USDA just announced that they'll be changing domestic sugar allotments for 2009. Import quotas will remain the same.

The original values, established by the USDA, anticipated that domestic producers could market their total 2008 crop, but the agency also felt that additional sugar supplies would be needed to satisfy domestic need in 2009. The upshot was establishing corresponding import quotas.

After additional analysis of the market, the USDA has readjusted the values and states,

"This reassignment will substantially increase the available supplies of domestically produced refined beet sugar... Before the reassignment, the marketing allotment program was preventing several domestic beet processors from marketing all of their beet sugar production."

By shifting allocations, processors with greater supply will be able to distribute sugar and better market their beet sugar production, making up for processors who can not fulfill their allotments.

The reallocation however, doesn't change the overall beet sugar allotment of 8,925,000 tons deemed necessary for domestic consumption in September of 2008.

The current numbers are as follows:

	Original Allotment (tons)	Revised Allotment (tons)	Allotment Reduction (tons)
Beet Sugar	4,850,738	4,652,665	198,073
Cane Sugar	4,074,262	3,512,752	561,510

If you do the math, there's deficit of 759,583 tons. As required by law, this sugar will be provided by imports.

"The surplus allotments were allocated to imports that were already expected under the latest World Agricultural Supply and Demand Estimates (May 12) report; thus, there will be no increase in projected raw sugar imports due to the reassignment,"

the USDA said.

In addition, adjustments are continuously made throughout the year to accommodate changes in the market and ensure enough of the commodity is available for domestic consumption... so future reassignment are foreseeable.

Seems like this action is sure to help shelter US companies from the current supply and demand issues surrounding global sugar consumption (see previous posting) and buffer sugar prices so that the food industry can continue to purchase sugar at fair rates.