WASHINGTON/NEW YORK Aug 1 All of the sugar
loans owed by processors due at the end of July have been repaid
in cash, though a surplus still hangs over the market and risk
of future forfeitures is "significant," a U.S. Department of
Agriculture spokesman said on Thursday.
The government-backed loans are owed by U.S. sugar
processors, and recent low sugar prices have increased the
threat that processors would forfeit sugar used as collateral.
The first tranche of loan repayment came due at the end of
July, though another $456.6 million, representing about 945,000
tonnes of sugar, shown as still outstanding in USDA data may
remain at risk for default.
"All of the outstanding USDA sugar loans that were due at
the end of July have been repaid in cash," said Brian Mabry, a
USDA spokesman, noting that the USDA has taken "extensive
actions" to support prices and reduce forfeiture risk.
The USDA purchased sugar for the first time in over a decade
in recent weeks, looking to stave off potential mass forfeitures
as domestic sugar prices have tumbled under the weight of hefty
U.S. and Mexican supplies.
The U.S. government purchased both raw cane and beet sugar
in two rounds of purchases through a re-export credit swap
program expected to reduce future imports by sugar refiners.
The second round was targeted at raw cane sugar most at risk
of forfeiture, the USDA said when it announced the plans.
Despite the efforts, the surplus continues to weigh on the
market and more intervention may be coming.
"USDA will continue to utilize all tools to operate the
sugar program at the least cost," Mabry said.
Last month, the USDA unveiled a rule to sell surplus sugar
to ethanol makers for feedstock. The "sugar-for-ethanol" program
was established by a 2008 law but never implemented.
September No. 16 U.S. domestic raw sugar contract on ICE
Futures U.S. closed at 20.05 cents a lb on Thursday.
Earlier this week, the front month rallied to 20.44 cents
per lb on expectations the government efforts may boost prices
above forfeiture levels. That was the closest prices have risen
toward an estimated forfeiture threshold of 20.9 cents since
"There's a very serious risk" of forfeitures at the end of
August and September when the bulk of the loans come due, said
Jack Roney, director of economics and policy analysis at the
American Sugar Alliance, noting the loans due at the end of July
totaled about $18.9 million.