Sugar trade deal strikes big blow to U.S. refiners, candymakers
By Chris Prentice
NEW YORK, March 19 (Reuters) - U.S. regulators' decision to approve a controversial trade deal with Mexico has struck a major blow to sugarcane refiners, who will struggle to source supplies, and confectioners, who will pay higher sugar prices.
The U.S. International Trade Commission on Thursday rejected challenges from Louis Dreyfus Commodities' Imperial Sugar and AmCane Sugar LLC, pushing ahead an agreement that sets floor prices and caps on imports from Mexico.
The deal rescinds the free sugar trade access for the two countries through NAFTA and ends a year-long spat over the $6 billion U.S. market.
The ruling is a victory for U.S. sugar beet growers and companies who complained a year ago that cheap Mexican sugar is flooding the market. The United States is a net importer of sugar and Mexico is one of its largest suppliers.
But for refiners, the deal will restrict raw-sugar supplies, and the price floors may crimp their margins.
Tighter margins due to higher costs will put refiners at a "substantial disadvantage" to sugarbeet processors and Mexican millers, said Frank Jenkins, president of JSG Commodities in Norwalk, Connecticut.
Refiners' margins will be below "a living wage," he said.
Imperial and AmCane did not respond immediately to requests for comment. They have also asked the U.S. Department of Commerce continue its probe. Continuación...