Spend Matters welcomes this guest article by David Galbicsek of Mintec.
The time for trick-or-treating approaches and with it the great candy feast. Statistics show that of all the candy consumed in the U.S. in a year, 4% of it is eaten on Halloween. That’s equal to two weeks’ worth of candy under less spooky conditions!
Only in cosy dreams does candy grow on trees. In reality it is manufactured with sucrose (known as white sugar) produced from sugar beet or cane. Sugar might mean good business for dentists but it’s a general concern for parents and health advisors. Although white sugar may be seen as the Halloween monster of dietary bad habits, the truth is that sugar is vital for our bodies. It’s the amount we consume that causes problems, not the sugar itself.
U.S. sugar has a price premium over the global marketplace. That’s because the U.S. sugar industry is protected from excessive cheap imports by tariff rate quotas (TRQ). These quotas apply to importing countries, meaning a low tariff is charged on “in quota” imports but the tariff rises for “over quota” imports, controlling the flow of sugar into the U.S. As U.S. sugar production is forecast to fall to 7.7 million tonnes in 2015/16 and consumption forecast at 11.0 million tonnes, imports are forecast to rise by 10% year-over-year to 3.5 million tonnes.
Imports mean that U.S. sugar prices are still influenced by global price trends but they are cushioned on the U.S. market. In the last year, global prices were generally falling but U.S. domestic sugar prices managed to stay relatively stable. Global prices fell from February 2015 to the end of September by 17% over the period, but US prices fell less than 1%. Although U.S. sugar prices haven’t fallen as much, the good news is the opposite can also be true. In 2009 for example, the yearly average global price of sugar rose by 46% year-over-year, while the U.S. the average price only went up by 17% year-over-year. Between 2009 and 2012, sugar prices rocketed due to supply shortages but now it seems that from the start of 2015 U.S. prices have found a comfortable level around which they have remained.
Bearing all this in mind, the price of Halloween candy is likely to also be quite stable this year. So, there’s probably no need to stock up on your treats for years to come. They’d just get eaten anyway...