US sugar producers reject higher RP imports

THE largest US sugar-growering group disputes an Agriculture Department forecast of an 89-percent drop in Mexican supplies and opposes looser import restrictions.

The forecast for Mexican shipments may be overstated, said Jack Roney, the group?s economics and policy analysis director in Washington.

The USDA has raised an estimate for US stockpiles in the year ending Sept. 30 by 14 percent and almost doubled the forecast for next year. The agency has until Sept. 30 to change the import rules before a six-month window closes.

We’ve got plenty of sugar on hand to sell, and there’s plenty of time to consider increasing import caps, Roney said. The USDA’s latest forecasts showed there was no urgency, he said.

A coalition of food companies including General Mills Inc., Kraft Foods Inc. and ConAgra Foods Inc. last week asked the government to raise import limits so they could buy more supplies from Brazil, the Philippines and other exporters. The companies cited diminishing inventories and surging prices.

Next year’s ratio of stocks-to-use, which the USDA forecast at 6.7 percent, would be the lowest since 1949, according to department data. Global prices have jumped 88 percent this year as output in India, the world?s largest producer after Brazil, is threatened by below-normal monsoon rain.

Under legislation passed last year, the USDA may only change sugar import quotas in the final six months of the federal fiscal year, which ends Sept. 30.

This year, the USDA expects 1.3 million metric tons of raw sugar to be imported under the quotas. Mexico’s shipments are forecast to reach 1.45 million short tons, more than double the 2008 level, and then plunge to 165,000 short tons next year.

A group of companies that use the sweetener in their products, including PepsiCo Inc. and Hershey Co., said Thursday that another 450,000 short tons needs to be available by Sept. 30 to meet US sugar needs.

Increasing the supply has the potential to benefit consumers, preserve and add jobs by guaranteeing adequate supplies to keep production lines running, the Sweetener Users Association asserted in a statement.

A higher quota may also reduce taxpayer costs as food prices affect inflation-indexed programs, the association said.

The USDA was monitoring the market situation, Justin DeJong, a department spokesman, said in a statement.

Sugar is the only major US crop subject to import limits. The restrictions are designed to benefit domestic producers.

Imports are restricted from almost all countries. Last year, Mexican shipments became exempt under the North American Free Trade Agreement. –Alan Bjerga, Bloomberg