In a move to support U.S. sugar prices the government sold almost 75% of its surplus supply to ethanol producers and offered to sell the balance for the production of biofuels or other non-food uses with the aim of reducing the supply of available sugar for human consumption and hopefully raising prices. Prices have fallen significantly because of a record global output and the U.S. Department of Agriculture (USDA) forecasts yet another year of record production. Biofuel makers bought 216,750 tons of U.S. government-owned sugar paying an average 2.6 cents per pound compared to the 20.6 cents per pound guaranteed to growers. Processors forfeited 296,500 tons of sugar posted as collateral rather than pay USDA loans because of low market prices. In July contracts hit a historic low of 18.40 cents per pound. U.S. processors are blaming Mexico in particular for the surplus because it is allowed duty-free access to the U.S. market.
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