The market situation is placing an unnecessary burden on sugar users for 2021/20022, which calls for urgent action by the U.S. Department of Agriculture to allow additional imports. The May World Agricultural Supply and Demand Estimates (WASDE) indicate a tightening of the 2020/21 sugar balance sheet but very likely understate the tightness in the current market. As always, the market itself is the best indicator of actual supply-demand conditions. On May 14, the #16 domestic sugar futures market closed above 32 cents per pound, a nine-year high. Clearly, current prices are inconsistent with the 14.7 percent stocks-to-use ratio shown in the WASDE.
As we will explain below, this disparity reflects both balance-sheet items that the WASDE likely misstates, and the effective isolation or “stranding” of raw sugar stocks in Louisiana due to limited refining capacity in that region. The Sweetener Users Association (SUA) urges the USDA to increase the availability of supplies in the market through authorities at its disposal, and to encourage a reallocation of the current tariff-rate quota by the U.S. Trade Representative.
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