High Duty Imports Impact US Sugar Complex

Frank Jenkins of the Jenkins Sugar Group

While Mexico has been busy of late importing 250,000 tonnes of sugar from world origins, the US buyers have had to be more innovative in drawing fresh supply into the market, writes sugar analyst Frank Jenkins of Jenkins Sugar Group.

As the USDA – which determines how much imported sugar will be allowed into the US each year – has kept supplies inordinately tight, the price of both refined and raw sugar has soared to massive premiums to the world sugar market. This has allowed traders to import world sugar outside the Tariff Rate Quota and pay a normally preemptive duty to the US government – an event not seen in the life of the modern US sugar program, dating back to the early 1980’s.

The High Tier duty for raw sugar is 15.35 cents per pound, allowing traders to land sugar in the US at roughly 34.00 cents per pound duty paid based on world raw sugar priced at 17.00 cents per pound. More interestingly, the duty for refined sugar is 16.21 cents per pound, refined sugar valued at 22.00 on the London exchange, can be landed in the US duty paid for about 40 cents per pound. This compares with US refined list prices ranging from 49.00 to 55.00 cents per pound.

While the imported refined is not in appropriate packing and is often not of the quality to compete directly with US made refined product, the fact that these imports are occurring is another indication that the US sugar market is is evolving, and the USDA’s management of the program is a major catalyst.

Jenkins Sugar Group.