December 9, 2014

On the U.S. futures market, sugar is 58% more expensive than on global markets hitting 23.98 cents per pound on the ICE Futures U.S. compared to a benchmark of 15.14 cents per pound globally. A year ago record sugar imports from Mexico caused U.S. sugar prices to plummet resulting in a price gap of only two cents and U.S. growers defaulting on more than $250 million in federal loans.  The U.S. is the world’s fourth largest sugar consumer, and it depends on Mexico for approximately 25% of its supply. In September the two countries signed an agreement restricting the amount of sugar to be imported from Mexico to the U.S., causing large buyers like candy companies to buy up available sugar believing that U.S. producers would not be able to meet demand, which in turn is driving up prices. Meanwhile, the U.S. Department of Agriculture forecasts that for the season beginning October 1, Mexico will export 26% less sugar to the U.S. year over year. Prices are cheaper in India and Brazil, where prices are 35 cents per pound and 28 cents per pound compared to 56 cents per pound in the U.S., and global prices are forecast to drop even further upon Mexico’s extra sugar entering international markets.

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