US faces sugar shortage, more imports are needed

March 18, 2010, 2:48pm

NEW YORK, March 18 (Reuters) – The United States faces a worsening sugar shortage and needs to import 1.0 million short tons (907,185 tonnes) of the sweetener this spring, the top official of one of the biggest US sugar producers said.

Imperial Sugar Chief Executive and President John Sheptor told Reuters in an interview the United States must import ''a minimum of a million (short) tons above the quota.''

The US Agriculture Department manages a sugar import program allowing countries like the Dominican Republic and the Philippines to ship sugar to the lucrative American market. The current TRQ sugar import program stands at 1.257 million tons.

''It's tight. I wouldn't call it short,'' he said.

The closely watched stocks-to-use ratio in the USDA's February sugar supply market report stood at 10 percent, down from 10.8 percent in January and below the 15 percent the government feels adequate for the market.

Sheptor said a good indication of the sugar shortage is the price differential between the No. 11 world raw sugar contract and the No. 16 US domestic raw sugar contract on ICE futures market in the US.

At one point early in February when the No. 11 raw sugar price was trading near 30 US cents a lb, the difference with the No. 16 domestic sugar market was around 10 cents.

Now, it stands close to 16 cents as the spot month in the No. 11 was trading around 22 cents and the front contract in the No. 16 at 38 cents.

''The No. 16 has not corrected as much. That is an indication there is a strong belief that the shortage in the US is going to be realized coming up in the next month,'' said Sheptor.