The Commerce Department says it will impose countervailing duties of 3-17 percent on sugar imported from Mexico following a preliminary ruling that Mexico unfairly subsidized its producers, said the Financial Times. Mexico, the largest sugar exporter to the United States, is guaranteed access under the North American Free Trade Agreement. Mexican shipments have surged to more than 2 million short tons a year, or 15 percent of U.S. supplies, which drove up the cost of U.S. sugar subsidies.
Economist Tom Earley of the Sweetener Users Association, a trade group for foodmakers, said the proposed duties would add 3-5 cents per pound to the price of Mexican sugar. The American Sugar Alliance, speaking for U.S. growers, said it hoped the Commerce Department would set the duties at higher levels in its final decision.
On Aug 12, USDA lowered its forecast of Mexican shipments in the upcoming trade year by 575,000 tonnes “based on signed contracts confirmed by USDA committing Mexico to ship to non-U.S. destinations in that amount in 2014/15.”
Also on Tuesday, the International Sugar Organization forecast a fifth year in a row of a production glut and said “global fundamentals are unlikely to support a rise in market values from current values,” said AgriMoney. ISO estimated production would exceed usage by 1.3 million tonnes in the 2014/15 marketing year, which opens in October. Prices for white sugar sank to a nine-year low last month. AgriMoney quoted ISO as saying, “Crucially, any possible price recovery brought by production shocks over the course of 2014-15 might be muted by the huge stocks accumulated since the beginning of the surplus phase in 2010-11.”