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  • As expected, the US has expanded Raw Sugar TRQs by 317k tonnes and increased refined quota imports by 181k tonnes.
  • Existing TRQ quotas will be expanded, subject to availability; it’s not clear how the refined quota will function.
  • Unless American sugar consumption falls or Mexican imports increase, further imports will be needed.

Raw Sugar TRQ Expansion   

  • A TRQ expansion is a straightforward process; TRQ holding countries with sugar available will see their quotas expanded.
  • Volume received will depend on sugar availability and shipments to date.
  • It is likely significant volume will go to Brazil, Dom. Rep, Guatemala, El Salvador, Peru, Australia and Argentina.
  • The USDA should publish a formal expansion notice in the coming days.
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Refined Sugar Quota  

  • We are still unclear as to how this quota will operate.
  • The official release states that the “US Trade Representatives will allocate this refined sugar TRQ increase.”
  • It is most likely the quota will be distributed on a first come first serve basis starting on a chosen date.
  • Distributing a quota by country would be complicated and delay the arrival of the sugar.
  • World market refined quota expansions or increases are rare as Mexico usually ships any shortfall in volume.
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  • However, we expect Mexico to struggle to ship its existing quota this season, let alone extra sugar.

Will this be Enough?  

  • If this the USDA assumption for Mexican shipments this season is accurate, more sugar imports will be needed in the future.
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  • Our model, shown above and available to you here, suggests a closing stock-to-use ratio this season of 11.7%, versus the USDA’s goal of 13.5%.
  • It is possible the USDA intends to reduce its forecast of American sugar consumption due to the impact of COVID-19.
  • We are currently expecting a 2.5% reduction in consumption in the USA in 2019/20.
  • If this assumption is correct, the increased imports will enough to ensure adequate stocks.
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*The further imports are shown in short tons to match the WASDE report.

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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