U.S. May Allow More Sugar Imports on Tight Supply, Imperial Says

Imperial Sugar Co. (IPSU), a U.S. processor, said the government may increase its quota for imports of the sweetener this month amid “tight” supplies.

The Department of Agriculture may allow more sugar from overseas under a low-tariff quota by as much as 300,000 metric tons, or 25 percent, in early April, said Patrick Henneberry, a senior vice president at Sugar Land, Texas-based Imperial. The USDA may boost the limit by another 150,000 tons later this year, he said.

“The USDA will have to add more sugar to the supply,” Henneberry said in an e-mailed response to questions. The first move may leave the market “too tight, as there were some supply disruptions, but that could be solved by a secondary quota increase.”

Raw-sugar prices have jumped 63 percent in the past year as adverse weather slashed output. On ICE Futures U.S. in New York, contracts for U.S. raw sugar are trading about 12 cents a pound higher than global prices. That compares with an average premium of about 9.7 cents in the past two years. The spread has widened as cold weather damaged crops in Florida, the biggest sugar-cane producer in the U.S.

Yearly Quota

The USDA sets the yearly quota based on an agreement with the World Trade Organization. Companies importing sugar within the quota pay lower tariffs than after the limit is exceeded. For the year started Oct. 1, the USDA set the quota at 1.21 million tons, said Ron Lord, the agency’s acting director for the import program and export reporting division.

“We could see the USDA announcing the increase as early as April 1,” Jack Roney, the director of economy and policy analysis for American Sugar Alliance, said in a telephone interview from Arlington, Virginia.

United States Sugar Corp. said in December unusually frigid weather in Florida “severely damaged” the sugar-cane crop.

Last year, the USDA raised the amount of sugar that can be bought under the low-tariff quota twice. The spread between U.S. and global sugar prices jumped to as high as 18.51 cents on May 28.

Yesterday, Imperial Sugar rose 13 cents, or 1 percent, to $13.34 in Nasdaq Stock Market trading. The shares have dropped 14 percent in the past 12 months.

(Source: http://www.bloomberg.com/news/2011-04-01/u-s-may-allow-more-sugar-imports-on-tight-supply-imperial-says.html)