TheCropSite.com- news, features, articles and disease information for the crop industry

USDA Sugar and Sweeteners Outlook


16 January 2014

USDA Sugar and Sweeteners Outlook - 16 January 2014USDA Sugar and Sweeteners Outlook - 16 January 2014


USDA Sugar and Sweeteners Outlook

On January 10, 2014, the U.S. Department of Agriculture (USDA) published in the World Agricultural Supply and Demand Estimates (WASDE) its latest sugar supply and use projections for the United States and Mexico for fiscal year 2012/13 and projections for 2013/14. The USDA made only small changes to the 2012/13 U.S. sugar supply and use based on updated data from Sweetener Market Data. The USDA reduced its forecast of 2013/14 Louisiana cane sugar by 100,000 short tons, raw value (STRV) to 1.600 million STRV, based on industry reporting. The USDA made no other forecasting changes. Ending sugar stocks are projected at 1.881 million STRV, implying an ending stocks-to-use ratio of 15.4 percent, down substantially from 18.0 percent last fiscal year. In spite of the extremely slow start to Mexico’s sugarcane harvest, the USDA made no changes to its Mexico sugar supply and use estimates/forecasts. Although it is early, Mexico sugar production will have to pick up substantially if the forecast of 6.695 million metric tons is to be met.

Sugar and Sweeteners in the North American Free Trade Agreement (NAFTA) Area

On January 10, 2014, the U.S. Department of Agriculture (USDA) published in the World Agricultural Supply and Demand Estimates (WASDE) its latest sugar supply and use projections for the United States and Mexico for fiscal year 2012/13 and projections for 2013/14.

U.S. Sugar

The Farm Service Agency (FSA) made several small revisions to Sweetener Market Data (SMD) for 2012/13. Cane sugar production in Louisiana was increased 1,550 short tons, raw value, (STRV) to 1.686 million STRV, and cane sugar production in Texas was increased 4,073 STRV to 172,974 STRV. These production increases were matched by a corresponding increase in ending stocks of 5,623 STRV to 2.160 million STRV.

The USDA reduced its projection of 2013/14 Louisiana cane sugar production by 100,000 STRV to 1.600 million STRV. Reliable sources put the 2013/14 crop year total at 1.589 million STRV, with the harvest season ending during the second week of January. That amount plus expected production in September 2014, less that produced in September 2013, yields the 1.600 million STRV projection level. There were no other changes made to the U.S. sugar supply and use balance (table 1). Ending stocks are projected at 1.881 million STRV, implying an ending stocks-to-use ratio of 15.4 percent, down from 16.1 percent projected last month.

Commodity Credit Corporation’s Actions to 2012/13 Crop Year Sugar Surplus

The Commodity Credit Corporation (CCC) took 10 separate actions in 2013 to manage surplus sugar in the domestic market (table 2). The first two actions in May and June involved waivers on Re-Export program licenses and bore no program costs. In July, to preempt the forfeiture of July-maturing loans, CCC exchanged, in two separate actions, 117,663 short tons of sugar it purchased from beet and cane processors for 381,082 short tons of import access rights (a 3.23 to 1 exchange ratio) for a net cost to CCC of $50,706,461, or a CCC net cost per pound removed of 6.7 cents. The relatively high exchange ratio was due to a 3-cent per pound margin between U.S. and world raw prices in July that made potential bidders more willing to exchange larger quantities of import credits for the physical sugar. With these actions, no July-maturing forfeitures occurred.

To preempt forfeitures of loans maturing on August 31, CCC publicly tendered offers under the Feedstock Flexibility Program (FFP) and purchased 7,118 short tons from a beet processor, which it then sold to an ethanol producer for a net cost to CCC of $2,733,120, or a CCC net cost per pound removed of 19.2 cents. Despite its efforts, some August-maturing loans were forfeited, and CCC traded its inventory, 85,375 short tons, in two rounds in September, for 226,765 short tons of import access rights (a 2.66 to 1 ratio), at a net cost to CCC of $34,568,951, or a CCC net cost per pound removed of 7.7 cents. CCC accepted a lower exchange ratio due to the increase in the margin between U.S. and world raw sugar prices to around 4 cents per pound during August and September, which made the export credits more valuable.

After that, CCC tried to preempt the forfeiture of loans maturing at the end of September, and bought 136,026 short tons, which it then sold to ethanol producers for a net cost to CCC of $53,294,794, or a CCC net cost per pound removed of 19.6 cents. On October 1, 296,500 short tons of September-maturing sugar loans were forfeited, which CCC sold in two rounds for $19,522,800, or a CCC net cost per pound removed of 19.8 cents.

In total, CCC purchased or acquired through forfeiture 642,681 tons of sugar to remove 1,047,490 tons from the marketplace, for a net cost to CCC of $258,716,027, or a CCC net cost per pound removed of 12.4 cents. CCC actions to remove surplus from the marketplace, in terms of cheapest to most expensive, were Re-Export credit exchanges, sales to nonfood use, and then sales to bioenergy.

Mexico Sugar and High Fructose Corn Syrup

The USDA made no changes to Mexico sweetener supply and use balances for 2012/13 estimates or for 2013/14 forecasts (table 3). As detailed last month, the USDA supply and use estimates and forecasts match closely with those of Mexico’s Comite Nacional Para El Desarrollo Sustentable de la Caña de Azucar (Conadesuca). Nonetheless, the USDA does have a higher 2013/14 ending stocks forecast of 969,000 metric tons (mt), or 22 percent of forecast sugar consumption. This forecast is 207,000 mt greater than the Conadesuca forecast. The USDA views the 22-percent ratio as representing a supply-use balance in Mexico that is consistent with the like balance in the U.S. market with its projected 15.4 percent stocks-to-use ratio. Because USDA forecasts exports as a residual, its higher stocks forecast implies Mexico sugar exports lower than Conadsuca’s forecast by 207,000 mt. The USDA export forecast is 2.623 million mt, with exports to the United States forecast at 1.494 million mt.

Published by USDA Economic Research Service

DOWNLOAD REPORT:- Download this report here

Share This


Related Reports

Reports By Country

Reports By Category

Our Sponsors