UPDATE 2-U.S.-Mexican sugar dispute sweetens U.S. sugar prices
(Updates with closing prices, adds background, details)
NEW YORK, April 4 (Reuters) - U.S. raw sugar futures rocketed to their strongest weekly gain in 3-1/2 years on Friday as an escalating trade dispute with Mexico kindled concerns about tighter supplies, breathing fresh life into the niche, thinly traded market.
Prices for domestic sugar notched a 10-percent weekly gain on hefty volume as traders continued to fret that Mexican mills could curb sales into the United States, one of the world's top sweetener consumers, in retaliation for any action the U.S. government might take following allegations that the mills were dumping sugar on the U.S. market.
U.S. sugar groups petitioned the U.S. International Trade Commission and the U.S. Department of Commerce last week for relief from alleged dumping of cheap, subsidized sugar from Mexico.
While traders waited for an official response from Mexican mills, concerns mounted about the impact of the dispute on the U.S. domestic market even as the global industry struggles with a massive surplus.
"The reality is setting in. People think there's a real chance (anti-dumping) duties could come into play," said Jerry Kramer of Kramer Sugar Co, a brokerage in Wellesley, Massachusetts.
Fears that trade flows between the two countries will be roiled was further fueled by statements from Mexico's economy minister this week that Mexican farmers could seek an investigation into U.S. high-fructose production in retaliation.
The second-month U.S. domestic raw sugar contract on ICE Futures U.S. catapulted to an 18-month high of 25.07 cents, before closing up 1.02 cents, or 4.3 percent, at 24.87 cents per pound.
Volumes were hefty for a second day with almost 2,000 lots of futures changing hands on the day, according to Reuters calculations. Continuación...