Global sugar prices soared last Friday after the U.S. said it would ease import restrictions to help avert a national shortage.
The U.S. Department of Agriculture on Thursday said it will give foreign sugar producers a bigger window to send sugar to the U.S. over the next two months.
World prices for raw sugar reached a five-month high on Friday, rising above 20 US cents a pound during the day.
Sugar for October delivery finished 2.4% higher at 19.95 cents a pound.
The USDA was responding to intense lobbying from sugar users, who claimed the country was in danger of running out of sugar. The USDA this year has twice increased its import quota at the behest of sugar processors and food manufacturers. The sugar users have long been vocal critics of the government’s restrictions on sugar imports, which they argue are designed to protect American farmers by keeping U.S. sugar prices high.
Farmers in turn say that the companies are just seeking ways to boost profits.
U.S. domestic sugar prices are at about 34.13 cents a pound, up 30% in 12 months.
Globally, sugar prices have surged more than 45% since the beginning of May, largely due to weather-related port delays in Brazil, the world’s biggest sugar exporter, combined with a spike in demand from the Middle East and Asia during the month-long Ramadan religious holiday. Also, floods in Pakistan ruined sugarcane crops there.
The USDA’s decision makes it easier for some smaller exporters like Belize to ship more sugar to the U.S., he said.
Global sugar demand is expected to outstrip supplies by 8.5 million metric tons in the current crop year that runs through Sept. 30, the London-based International Sugar Organization has said.
In the following crop year, supplies may outstrip demand by 2.5 million tons, it said.