Alexander & Baldwin Inc (ALEX), The Hershey Company (HSY): Your Wallet’s About to Get Hit at the Checkout Line

Page 1 of 2

U.S. sugar producers are bemoaning low-cost sugar imports from Mexico. After our trading partner increased sugar shipments to the U.S. from 6 million metric tons to 8 million during last growing season, producers said prices were pummeled, and it created instability in the sugar market.

Mind you, U.S. consumers pay twice as much as the rest of the world does for its sugar because the federal government subsidizes the industry and imposes ridiculously high tariffs on imports. In fact, sugar is the only major U.S. agricultural commodity for which the government takes a proactive position in managing imports. A few years back, when sugar prices were soaring, there was no similar complaint from the industry about the “volatility” they were experiencing.

Yet under the North American Free Trade Agreement, Mexico is exempt from the quotas and tariffs, so the influx of sugar from south of the border caused stockpiles to rise even though U.S. production was curtailed as a result of a dry growing season and a problem with discolored sugar at American Crystal Sugar. It still tasted sweet, but no one really wants off-color sugar.

Alexander & Baldwin Holdings Inc (NYSE:MATX)And producers such as Alexander & Baldwin Inc (NYSE:ALEX) Hawaiian Commercial & Sugar were already feeling the impact of a depressed market as Brazil and Thailand engaged in a price war that boosted production amid a worldwide supply glut. It produced 15% more sugar last quarter but sold almost 2% fewer metric tons, and though its agribusiness recorded higher profits, they were offset to a large extent by lower sugar prices and volumes.

So news that Mexico’s soft-drink industry was voluntarily buying up 400,000 metric tons of sugar was a welcome reprieve, even though the Mexican sugar industry’s trade rep said most of the exports to the U.S. were estandar sugar, or a raw, less refined product, and not white sugar.

That’s not likely to be a sweet sound to sugar users, however. A coalition of food and beverage manufacturers has pushed for reform of the subsidies being paid to producers to help their own bottom line.

The Hershey Company (NYSE:HSY), for example, saw a 290-basis-point increase in profit margins as a result of lower commodity costs in the second quarter, and year to date those lower costs have pushed adjusted gross margins 260 basis points higher. The Coca-Cola Company (NYSE:KO) switched to high-fructose corn syrup and aspartame years back because it’s cheaper than sugar, but it has also seen its so-called “Mexican Coke” — the sparkling beverage made with real sugar — develop something of a cult following. PepsiCo, Inc. (NYSE:PEP) itself introduced its “throwback” style of soda that’s made with real sugar to satiate the thirst of consumers looking for better taste.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!