Insight Focus
US sugar trading was muted amid discussions on imports and forfeitures. Elevated stocks-to-use ratios above the USDA’s balanced range make forfeitures a real possibility. More forfeitures could drive additional high-tier imports and deepen supply imbalances, while the corn sweetener market remained focused on contract fulfilment.
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Trading activity was slow this week, but sideline discussions featuring plenty of talk about coverage needs and 2027 sugar prices were active throughout the International Sweetener Colloquium, held February 22–25 in Championsgate, Florida.
Dialogue about imports, including high-tier imports, as well as the potential for forfeitures occurring this year, was also evident in both peripheral meetings and speaker presentations at the event. Both spot and forward prices remained unchanged.
“I think it’s a very real possibility,” said Frank Jenkins, president of JSG Commodities, when asked during a panel discussion at the Colloquium whether he thought forfeitures were likely this year.
Jenkins shared that his company’s stocks-to-use forecast was 17.25%. The USDA, in its February 10 WASDE report, set its forecast at 15.9%. Generally, the department aims for a stocks-to-use ratio between 13.5% and 15%, which implies a balanced supply-and-demand equation for the US sugar market. The last time the ratio fell within this range was during the 2022–23 marketing year, at 14.3%. The USDA estimated stocks-to-use at 17.4% in 2023–24 and 19.9% in 2024–25.
Source: USDA
Jenkins said forfeitures typically occur when the stocks-to-use ratio exceeds 17.25%, though the prospect of higher loan rates helped stave off forfeitures in recent years. Loan rates for refined beet sugar and raw cane sugar were raised significantly for the current marketing year with the passage of the One Big Beautiful Bill Act. With the market deep in bearish territory, forfeitures appear to be a tempting option for many processors and refiners.
“If you don’t repay that loan, you don’t have to pay the interest on the loan either,” Jenkins said. “If I don’t forfeit sugar, then I have to, obviously, finance that sugar and pay for storage. If I forfeit the sugar, I keep the money from the loan, and the USDA starts paying 27c/cwt per month for raw sugar and 34c/cwt per month for refined sugar per producer if they forfeit the sugar. So, there’s a huge financial incentive not to carry that sugar.”
While forfeiting may seem like a reasonable option for processors and refiners with excess sugar and too few buyers willing to pay the domestic price, Jenkins said it could lead to an increase in high-tier imports. The surge in these imports in recent years has contributed to the imbalance in the US market, as buyers have turned to more competitively priced foreign supplies.
Source: USDA
The corn sweetener market was quiet. Refiners focused on producing and shipping products to fulfil contracts.
