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USDA reallocates sugar allotments

The U.S. Department of Agriculture's Commodity Credit Corporation (CCC) announced the reassignment of projected surplus beet and cane sugar marketing allotments and allocations under the fiscal year (FY) 2009 Sugar Marketing Allotment program.

Sugar marketing allocations of the allotments were transferred from processors with insufficient supply to those processors who had more sugar supply than allocation. This reassignment will substantially increase the available supplies of domestically produced refined beet sugar. Before the reassignment, the marketing allotment program was preventing several domestic beet processors from marketing all of their beet sugar production.

CCC also announced, subject to further proceedings, it is redistributing a portion of the American Crystal Sugar Co.'s allocation to other sugar beet processors in response to legal proceedings contesting the transfer of sugar marketing allocation from the Pacific Northwest Sugar Co. to the American Crystal Sugar Co.

This redistribution does not affect the net aggregate beet sugar allotment for fiscal year (FY) 2009 given the current supply situation. However, this redistribution will be considered a permanent allotment transfer for future years. The legal proceedings resulted in an 82,425-ton net decrease in American Crystal Sugar's allocation, and a corresponding increase, on a pro-rata basis, to the other sugar beet processors.

The FY 2009 beet and cane sector allotments are larger than can be fulfilled by domestically-produced beet and cane sugar, so the remaining sector surpluses were reassigned to raw sugar imports as required by law. The surplus allotments were allocated to imports that were already expected under the latest World Agricultural Supply and Demand Estimates (WASDE) report; thus, there will be no increase in projected raw sugar imports due to this reassignment.

CCC announced the FY 2009 overall allotment quantity (OAQ) and company allocations on Sept. 30, 2008. At the midpoint of the fiscal year, CCC reviewed the expected use of the company allocations relative to their sugar supply and today's announcement is a result of that review. CCC evaluated each company's current inventories, estimated production, expected marketings, and other factors affecting a sugar beet or sugarcane processor's ability to market its full allocation.

Based on data supplied by the processors, the beet sector will be unable to market 198,073 tons of its current sugar marketing allotment. The beet sugar allotment will be reduced by this amount to 4,652,664 tons. Raw cane sugar processors are expected to have a sugar marketing allotment surplus of 561,510 tons. The cane sugar allotment will be reduced by this amount to 3,512,752 tons. Due to uncertainties that still exist in forecasting each company's and sector's FY 2009 sugar production, more allocation is left with the companies than is expected to finally be used in FY 2009. Further reassignments are likely.

The revised 2009 crop year beet and cane sugar marketing allotments and processor allocations are listed in this table:

Table (pdf):

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