How Will the Results of the Presidential Election Impact Sugar Prices?

Tariffs, the Farm Bill, Taxes, and other campaign promises can potentially impact sugar supply, demand and pricing.

CSC Sugar and Sugaright weigh in.

Suspension Agreement Supercedes Farm Bill Prices

While not to discount the genuine impact changes in the farm bill have on how US farmers operate, as it relates to sugar prices, our market has been operating well outside ‘farm bill economics’. Specifically, the farm bill establishes loan rates for US farmers, creating a price floor for our market.

 Lately, however, domestic sugar prices have been trading far beyond those support prices, mainly as a result of how imports are being managed. Even before high-duty imports became a significant factor in solving our sugar deficit, the agreements with Mexico and the minimum prices established in those agreements superseded the minimum prices established in the farm bills. Moreover, the provisions set forth in those agreements are handled by the Department of Commerce, outside the Farm Bill reach which is negotiated by Congress.

Sugar Already Has High Tariffs

Though Trump campaigned on using tariffs to replace income lost by lowering income taxes, most economists agree that such an act would be highly inflationary and would put a greater burden on the middle and lower classes. Any additional tariffs certainly will not lower consumer prices.... a key campaign promise.

The current price of refined sugar in the marketplace is an example of how tariffs bake high prices into a widely used commodity, resulting in higher food costs.

Demand for Sugar is Resilient

Weight loss drugs, front-of-package labeling, and sugar reduction measures have appeared to have a minor impact on consumer demand for sugar. The flat demand for sugar with a slightly rising population indicates the per capita consumption of sugar may be decreasing, albeit very slowly.

The Domestic and Global Supply of Sugar is Perpetually Uncertain

No matter who is in the White House, the impact of severe weather events, government intervention, and the sugar/ethanol mix on sugar prices will continue to be volatile. This argues for a supplier who can manage this risk for you with a wide global reach and redundant supply.

Common Purpose

For those of us integrally involved in the sugar sector, we are no strangers to tough competition and uncertainty, Sometimes our competitors are also our trading partners. When we focus more on maintaining a healthy and robust industry than we do on our differences. we keep sweet foods on consumers' shelves with minimal disruption.

We expect our elected government officials to act with a similar focus on shared goals.

Americans are more alike than we may have been led to believe during a very divisive election season. We hope the US will find a path forward that embraces all that is good about our country by reaching across the aisle and seeking common ground for the benefit of all citizens.