Sweet and Sour

Sweet and sour news greeted the nation's sugar lovers last week. The palatable side: after 20 months of dizzying, nonstop rises (TIME, Dec. 9), wholesale sugar prices dipped slightly. Major refiners, including Amstar Corp., the nation's biggest producer, and SuCrest Corp., pared the cost of a 5-lb. bag of sugar by 25-c-, to $3.48. The sour news is that despite these reductions, supermarket prices are likely to continue rising for weeks before they decline or even stabilize, because the recent rapid series of wholesale boosts--seven in the five weeks prior to last week--have not yet come close to working their way through to the retail level.

The key reason for the wholesale-price dip, say sugarmen, is the declining price of the raw product. Sugar speculators, sensing that they had bid up the price on commodity exchanges to an unsustainable peak, have recently begun to dump their holdings and take their profits. U.S. spot prices of raw sugar have tumbled 10-c- per lb. in the past two weeks to 50-c-. World sugar prices (the U.S. imports about half the 11.5 million tons that it consumes each year) have fallen from 59-c- to 49-c- per lb. in the same period.

Refiners could well have had additional reasons for seizing the first opportunity to cut wholesale prices. Fed up with high sugar costs, the Consumer Federation of America is staging a ten-day nationwide consumer boycott scheduled to end Dec. 10. Some supermarket chains, like Tradewell Stores Inc., which operates in California, Oregon and Washington, are urging customers not to buy sugar at all; in one week the chain's sugar sales dropped 75%, according to Tradewell President Al Thompson. Moreover, the fourfold increase in retail sugar prices so far this year has fattened company profits remarkably, but those profits have also attracted increasing political heat, including Government hearings, a federal grand jury inquiry and a Justice Department investigation.

Whether the latest cuts presage the beginning of the end of the sugar-price explosion is open to question, especially given the notorious volatility of commodity prices. Says Amstar President Robert T. Quittmeyer: "We'll know better in the next few months." World sugar production is still running behind demand. But if the speculative spiral on the commodity markets continues to unwind, some experts who had thought that no price relief was in sight now believe that retail sugar prices could drop from their present 65-c- to 80-c- per lb. to about 45-c- in the next six months or so.

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