U.S. sugar refiner woes mount as Mexico deal seen choking supply
By Chris Prentice
NEW YORK Nov 18 (Reuters) - At first blush, the powerful U.S. sugar industry seemed to clinch a big win last month when U.S. trade authorities struck a deal to restrict rising imports from Mexican rivals.
With a closer look, however, it appears that big cane refiners - including the maker of household brand Domino Sugar - might be the biggest losers because the deal could choke off imports of raw sugar from Mexico, cutting critical feedstock.
The pact setting quotas and prices on Mexican sugar imports for the first time appeared to be the best possible outcome to a months-long dispute that had threatened to escalate into an all-out trade war.
Facing global refined prices languishing at multi-year lows and a market that has been in surplus for years, U.S. sugar producers accused Mexico in March of flooding the heavily protected U.S. market with cheap, subsidized refined sugar and called for penalties on imports.
Domino, the top U.S. refiner, is owned by ASR Group, which is the only cane processor that signed onto that case.
For Mexican mills and U.S. food manufacturers such as Hershey Co, the eleventh-hour deal might be a better alternative to the import penalties threatened by the trade case. The new reference prices are about half those including duties.
The U.S. Department of Commerce has slapped duties of over 50 percent on imports, but has said it will drop them if the pact is sealed.
Refiners not involved in the trade case, such as Louis Dreyfus Commodities BV, which owns Imperial Sugar, are also worried, according to filings to the Commerce Department on Tuesday ahead of the deadline for comment. Continuación...