KANSAS CITY — Blackhive Corp., Inc. has declared force majeure on its Mexican sugar contracts due to government intervention, unavailability of supply and potential countervailing duties and antidumping action related to the antidumping and countervailing duty investigation of U.S. imports of Mexican sugar, said Ryan Efurd, chief executive officer of Blackhive.

The American Sugar Coalition filed an antidumping and countervailing duty petition March 28 with the U.S. Department of Commerce and U.S. International Trade Commission claiming Mexico dumped subsidized sugar into the U.S. market that will cost U.S. sugar producers about $1 billion in the current marketing year. The D.O.C. said April 18 it would initiate an investigation into the complaint. Preliminary determinations on various aspects of the case are expected by May 12 from the I.T.C. and by June 23 and Sept. 4 from the D.O.C.

“This petition is ill timed and short sighted,” Mr. Efurd said. “This action by the petitioners has already increased prices at restaurants and supermarket shelves across the country. It does not bode well for the U.S. sugar program or the farm bill. The petitioners forfeited $280 million worth of sugar in 2013, which landed squarely on the U.S. government and the U.S. taxpayers after coming off three years of record profits.”

The Fayetteville, Ark.-based company handles about 300,000 tonnes of sugar annually, with about half of that amount originated from Mexico, Mr. Efurd said. About half of Blackhive’s business is in sugar, with the other half in dry edible beans, rice, tomato products, vegetables, fruits, meats, flour, salt and other food ingredients. The company has distribution facilities in California, Georgia, New Jersey, Ohio, Tennessee and Texas in the United States as well as in Mexico. They are one of the largest processors of pinto beans and black beans in the United States with two plants in North Dakota.

“It is well documented the U.S.D.A. and Mexican Sugar Chamber have been working to keep Mexican imports out of the United States and on the world market, which has made this year so difficult to keep a reliable steady stream of sugar coming over for our customers,” Mr. Efurd said. “We are currently securing sugar from domestic suppliers or from other countries, including Colombia, to help our customers meet their needs. The support we have received from our customers has been overwhelming in this perilous situation as they understand it’s out of our control at the moment. It’s a huge testament to our traders and the relationships they build with their customers. They are working diligently to help their customers find sugar in the short term at the most cost effective prices possible.”

Some trade sources noted calls from users seeking sugar from other suppliers after the Blackhive action.

Domestic bulk refined beet sugar prices quoted by Milling & Baking News were around 26½c to 27c a lb f.o.b. Midwest with refined cane at 28½c to 32c a lb f.o.b. from mid-February through March, but values shot up 4c to 5c a lb since March 28, when the American Sugar Coalition filed its petition.

Mr. Efurd said he recommended users “short cover” for at least 120 days “and see what happens.”

U.S. imports of sugar from Mexico were record high during the first six months (October-March) of the current 2013-14 marketing year. Under the North American Free Trade Agreement, sugar and corn syrup products can trade duty free and quota free between Mexico and the United States, but NAFTA doesn’t prohibit antidumping or countervailing duty actions.

“The public data available shows that 1 million tons of Mexican sugar have come across the border since October,” Mr. Efurd said. “The lion’s share of that sugar has gone directly to U.S. sugar producers. Since the petition has been filed, they’ve announced price increases of 15%. I think it’s safe to say the U.S. cane refiners enjoy the cost benefits of Mexican sugar and the freight arbitrage it affords, they just don’t want to compete against it from other trade houses, resellers or importers.”

Traders fear supplies could dry up after May, or at a minimum become more expensive if the D.O.C. and I.T.C. find in favor of U.S. producers and place duties or quotas on imports of Mexican sugar.