US sugar supply falls to critically low level

Sugar supplies in the US have fallen to a level considered critically low by domestic consumers due to a 35% drop in Mexican imports, USDA data showed on Tuesday.

The drop in the closely-watched stocks-to-use ratio for the current marketing year to 6.8% is within a range that previously has prompted action to increase imports and will likely stoke calls from already-concerned sugar consumers for the government to raise imports even as US output increases.

The decline is likely to increase pressure on the government to increase imports, despite an increase in local harvest.

The record was the second lowest ratio of stocks on consumption for the business year which runs from August 2012 to July 2013 and marks a collapse from 9 percent recorded in March.

The new forecast is, however, above the 5.3 percent estimated by the USDA in its report of December and January.

The USDA would prefer that the ratio is about 15 percent to achieve a balanced market and a level of around 5-7 per cent has led the government to import in the past.

The main reason affecting the supply is the decline in imports from Mexico, where a drought hit the crops of sugarcane.

This total inventories dropped to 12.452 million short tons, compared to last month’s projection of 12.702 million, the USDA said.

The USDA said Tuesday that sugar production in the period 2011/12 would grow to 8.16 million short tons from the estimated 8.03 million in March.

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