Though the price of sugar in the global market hovered near five-year lows in September, prices in the U.S. have been on the rise while sugar is getting cheaper in most other places. Due to government policies that restrict imports to support domestic growers, sugar prices in the U.S. have always been a few cents higher than the world rate. However the gap has increased significantly this year after the government threated to impose higher taxes on imported Mexican sugar.
The U.S. is the world’s fourth largest sugar consumer and relies on imports primarily from Mexico, which contributes about 25% of U.S. sugar supply. A year ago, the gap between the two countries was only 2 cents; however, record-high imports from Mexico sent U.S. prices plunging, forcing growers to default on federal loans, which cost the government more than $250 million. In October, Mexico struck a deal to send about 26% less sugar to the U.S. Candy makers and those who rely on sugar like PEZ Candy, Hershey Co. and Mars Inc., will feel the pains of prices increases due to scarcity.
In October, the median U.S. retail sugar price was 56 cents a pound, compared with 35 cents in Brazil and 28 cents in India.
By Samantha Hua