In a show of unity, U.S. sugar producers and industrial sugar users delivered, on June 11, a joint recommendation to the U.S. Department of Agriculture  (USDA) to shore up sugar supplies this fall.

The recommendation, which came in the form of a letter from the Sweeteners and Sweetener Products Agricultural Technical Advisory Committee, suggested that the USDA expedite its announcement of the FY2011 Tariff Rate Quota, which would provide access to the U.S. market for no less than 1.256 million short tons of raw and refined sugar from 40 countries.

An early announcement would enable foreign suppliers to begin preparing shipments that may be needed to maintain strong sugar refinery output before domestic sugar harvest ramps up and significant inventories are built in November and December.

“We have always told sugar users and USDA officials that we would alert them to tightening supplies so our customers can continue normal operations,” explained American Sugar Alliance Chairman James Johnson. “An early TRQ announcement can head off possible problems before they occur.”

Late summer is usually the earliest the USDA announces foreign quota amounts for the fiscal year.  Overseas suppliers then prepare shipments and transport raw sugar to the United States, a process than can take weeks.  An early announcement would speed the process so the raw sugar can begin arriving as soon as October 1.

Johnson expects domestic supplies will strengthen as domestic sugarcane and sugarbeet harvests get underway in the fall. 

The market seems to agree with Johnson’s prediction.  Publicly reported prices for delivery of both raw and refined sugar in November and beyond are sharply lower than current prices. 

Wholesale refined sugar prices averaged 48 cents and 45 cents per pound in April and May respectively, according to USDA data, but asking prices for sugar delivered after October have fallen by as much as 10 cents per pound.

The short-term futures contract for raw sugar delivered in November is 28 cents per pound, which is down from current trading prices of 32.5 cents.