Supply Demands

USDA adjusts sugar program in response to supply disruptions.
In a move commended by the Washington, D.C.-based International Dairy Foods Association (IDFA) and other members of the Sweetners Users Association, the U.S. Department of Agriculture (USDA) on September 29 made its third adjustment to the sugar program in order to increase U.S. market needs after recent hurricanes caused supply disruptions. In the most recent adjustment, the USDA increased the fiscal year 2006 marketing allotment quantity, and the sugar cane portion of the increase was immediately reassigned to imports.  
U.S. Agriculture Secretary Mike Johanns announced an increase in the fiscal year (FY) 2006 Overall Allotment Quantity (OAQ) of 225,000 short tons raw value (STRV). The new total OAQ is now 8.825 million STRV, with 4.796 million STRV allocated to the beet sector and 4.029 million STRV allocated to the cane sector. The allocations of this OAQ increase to beet and cane companies will be announced later.  FY2006 domestic cane sugar supplies were already projected below the FY2006 cane sector allotment. Given the increase, the cane sector is now projected to be able to supply 276,000 STRV less than its FY2006 allotment and this amount is immediately reassigned to imports.
Johanns also announced a sugar tariff-rate quota (TRQ) under the terms of the North American Free Trade Agreement (NAFTA). As part of the Bush administration’s commitment to fully implement NAFTA, Johanns has determined that Mexico is a net surplus producer and has established a TRQ for Mexico of 276,000 STRV. Mexico’s total FY2006 TRQ of 276,000 STRV represents an increase of 268,000 STRV above the previously-announced level of 8,000 STRV. This sugar may enter the United States during FY 2006 as either refined or raw sugar.
The USDA expects these actions to lead to additional supplies of refined sugar to meet urgent market needs in light of supply disruptions caused by Hurricanes Katrina and Rita. The USDA continues to closely monitor the market and industry fundamentals. Should additional sugar be required, the USDA will consider further expansion of the TRQ.  
Sources: USDA and IDFA
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