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  • The USDA has redistributed 78k tonnes of unused raw sugar quotas to ensure imports arrive. 
  • This follows a poor American beet harvest after the early onset of winter. 
  • Mexico will still supply the majority of US sugar arrivals. 

What are Tariff Rate Quotas (TRQ)? 

  • Tariff Rate Quotas are duty-free entry quotas into the USA for sugar, distributed to specific countries.
  • They can be for raw sugar (1.1m tonnes) or refined sugar (192k tonnes).
  • Raw Sugar TRQ sugars are the second largest source of imports into the USA, after Mexican sugar.

What is TRQ Redistribution?

  • The United States Department of Agriculture (USDA) can redistribute quota volume that will not be shipped to other origins that will be shipping their full allocation.
  • These reallocations ensure as much as possible of the existing TRQ quotas are filled and import targets are met.
  • Imports will play a key role in the US market this season, following the poor beet crop.

US TRQ Allocations by country and Reallocated Volume

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  • The USDA has not announced who will have their allocation withdrawn, but on average at least 80k go unfilled annually.
  • The USDA is being proactive to ensure as much TRQ sugar can enter the US, having responded too late last year.
  • Reallocating quotas does not the increase supply, however, meaning the USDA still expects all other import quotas to be met.

US Sugar Import Quotas

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  • Mexico is at particular risk of not fulfilling their quota due to drought and a slow start to the crop.
  • But under the US-Mexico trade rules, the USA must give Mexico first refusal on increased quota access.
  • The USA has not increased TRQ volumes, suggesting Mexico has confirmed it plans to fill its quota.

Can Mexico Really Meet Their Quota?

  • 47% of US sugar imports will come from Mexico this season.
  • As readers can see here, the crop has started slowly but the crushing pace has caught up with the average pace.
  • The 1.66m tonne US quota Mexico received this year is the third largest in the 10 years, and largest since the suspension agreement.

Mexican Exports to the USA

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  • If Mexico does fill their quota, the USDA should reach the desired 13.5% stocks-to-use ratio by the end of September 2020.
  • If they don’t, the US will have to expand the TRQs or hope the world market allows for full duty paid imports.
  • We published a guide to the US import system here.

Vincent O’Rourke

Vincent began his career at CZ in 2016 as an analyst in the London Office, focusing on raw sugar flows and the Refineries in North Africa and the Middle East. Since 2019 Vincent has moved to the Miami office, leading the Americas analysis (excluding Brazil) and implementing the new data capture and database processes. Vincent graduated from Edinburgh with a master’s in theology in 2015 and completed a Masters in Emerging Economies from King’s London University in 2016

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