Insight Focus

• The US announced a TRQ increase of around 125,000 tonnes for 2024.
• This is due to damaged US beet and underperforming Mexican crops.
• Brazil, the Philippines and Australia received the largest TRQ increase.

Last week, the US announced a TRQ increase of around 125,000 tonnes for 2024. Just recently the quota allocations were announced.

What is the TRQ system?

The US allows 1.117 million tonnes (raw value) of sugar to enter under the TRQ Program annually. The TRQ Program allows raw sugar with a polarization below 99.49 to enter the country with no tariff. Most sugar-producing countries receive an allocation from the quota.

Usually, Brazil and the Dominican Republic receive the highest allocation. When Mexico (the US’ largest sugar supplier) or other countries fail to supply sufficient sugar, unused TRQ can be re-allocated to other countries.

Growing Beet Concern

Unusual warm weather in Michigan and across the US Midwest has damaged part of the beet crop since harvested beets are partially stored outside. These outside beet piles require cold weather, with warmth leading to perishing. The warm weather so far has damaged over 100,000 tonnes of beet sugar.

Second Consecutive Poor Mexican crop

Mexico is the US’ largest exporter of sugar. The majority of Mexico’s excess sugar enters the US without tariffs. However, for the second year, droughts have significantly affected cane development in Mexico, causing uncertainty for the US, its primary sugar customer.

Typically, Mexico produces approximately 5.7 to 6 million tonnes of sugar annually. However, during the 2022-23 harvest, this figure dropped to 5 million tonnes. The 2023-24 harvest plummeted even further, reaching a 10-year low of 4.7 million tonnes.

TRQ Increase

The damaged US beet and underperforming Mexican crops have caused the US to increase TRQ allocations by 125,000 tonnes. Brazil, the Philippines and Australia received the largest TRQ increase.

The United States usually allocates TRQ increases to countries that complete their TRQ quotas consistently. Oddly though, the US allocated the Philippines 25,000 tonnes — or 20% of the TRQ increase – despite the fact that it surrendered its initial TRQ quota of 145,000 tonnes for 2024.

The other increases are as shown in the chart below.