FOR IMMEDIATE RELEASE CONTACT: Phillip Hayes
From the International Sweetener Symposium:
Sugar Prices Falling, But Big Candy Makers Still Complaining
COEUR D'ALENE, Idaho—The worst drought to hit America since 1988 has sent crop prices through the roof, with one notable exception: Sugar.
Decade-high surpluses, a strong domestic crop, and seemingly endless supplies of Mexican sugar entering through the North American Free Trade Agreement have lowered wholesale sugar prices by 30 percent in the past two years, according to U.S. Department of Agriculture (USDA) data. USDA also projects large sugar surpluses overhanging next year’s market.
Sugar growers hoping for a price rebound didn’t get much good news today from Frank Jenkins, the president of Jenkins Sugar Group, a sugar market brokerage and consultancy firm. Jenkins expects even higher surpluses than USDA and said prices should continue a downward march unless the drought extends to sugar country or there is an unexpected swing in global sugar market conditions.
“The default position is bearish,” said Jenkins at the 29th International Sweetener Symposium, “with pressure from the large domestic crop pinning U.S. raw [sugar prices] down.” Jenkins also noted that wholesale-refined prices, currently about 40 cents per pound, could fall to the mid 30-cent range.
Sugar producers likely weren’t the only ones disappointed by Jenkins’ predictions. Lobbyists for big candy companies have used U.S. sugar prices as the centerpiece of their calls for weakening no-cost sugar policy in the 2012 Farm Bill.
“With sugar prices falling and continued falls forecasted, it’s hard for opponents of sugar policy to claim candy-company hardship,” said Jack Roney an economist for the American Sugar Alliance (ASA).
And Roney points out that sugar in the United States is already affordable. ASA recently released a study of global retail sugar prices that showed grocery shoppers in the rest of the world were paying, on average, 14 percent more for sugar than Americans.
Roney, who introduced Jenkins at the meeting, noted that confectioners’ lobbyists have also been hurt on Capitol Hill by recent candy-company profit announcements.
“Confectioners have higher profit margins than major oil companies, and it’s easy to see why,” he said. “Their sugar costs are falling and instead of sharing the savings with consumers, they’re actually increasing the price of candy so they can inflate their bottom lines.”
“That makes it pretty difficult to poor-mouth on Capitol Hill,” he concluded.
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