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

USDA Sugar and Sweeteners Outlook


14 March 2014

USDA Sugar and Sweeteners Outlook - 14 March 2014USDA Sugar and Sweeteners Outlook - 14 March 2014


USDA Sugar and Sweeteners Outlook

The U.S. Department of Agriculture (USDA) changed its projection of 2013/14 cane sugar production in two States based on revised forecasts made by sugarcane millers: in Florida by a decrease of 15,000 short tons, raw value (STRV), to 1.765 million STRV, and in Hawaii by an increase of 5,000 STRV to 190,000 STRV. Beet production remains projected at 5.025 million STRV.The USDA made no changes to imports but did raise exports by 75,000 STRV to 325,000 STRV. The USDA increased its projection of deliveries for human consumption by 110,000 STRV to 11.600 million STRV, but at the same time it lowered sugar deliveries made under the sugar-containing products component of re-export imports program by 50,000 STRV to 100,000 STRV.

Ending stocks are projected at 1.682 million STRV, 142,000 STRV below last month’s projection. The stocks-to-use ratio is projected at 13.6 percent, reduced from last month’s 14.9 percent.

The USDA made no changes to Mexico 2013/14 sugar supply and use. Nonetheless, the lower than average pace of production and even consumption suggests close attention to forthcoming estimates by Mexico’s Comite Nacional Para El Desarrollo Sustentable de la Caña de Azucar (Conadesuca) over the next several months.

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

On March 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. Table 1 shows the latest estimates and projections for the United States, and table 3 reports comparable data for Mexico.

U.S. Sugar

The Farm Service Agency (FSA) made several small revisions to Sweetener Market Data (SMD) for 2012/13 based on corrected data. Florida cane sugar production was increased by 1,220 short tons, raw value (STRV) to 1.867 million STRV. The ending stocks estimate was increased by 3,050 STRV to 2.160 million STRV. Beginning stocks for 2013/14 are the same as ending stocks for 2012/13.

The USDA changed its projection of 2013/14 cane sugar production in two States based on revised forecasts made by sugarcane millers: in Florida, a decrease of 15,000 STRV to 1.765 million STRV; and in Hawaii, an increase of 5,000 STRV to 190,000 STRV. As reported last month, the Florida crop has been hurt by rain and freezing temperatures in January. Although the National Agricultural Statistics Service (NASS) increased its Florida sugarcane for sugar area by 1,000 acres to 398,000 acres, it reduced its forecast of yield from 36.6 to 34.6 tons/acre in March. The sugarcane for sugar crop is forecast at 13.771 million tons, down 759,000 tons from last month, or 5.2 percent.

The USDA made no changes to imports. The Foreign Agricultural Service (FAS) estimates that sugar imports from Mexico have totaled 839,169 metric tons, raw value (MTRV), or 925,025 STRV, through the end of February. This amounts to about 53 percent of projected total year imports from Mexico. For the 7 months remaining in the fiscal year, the average level of imports would have to equal 117,139 STRV per month to reach but not exceed the fullyear forecast. This monthly average would be about 37 percent lower than the average for the first 5 months.

Sugar imports entering under the 2013/14 raw sugar tariff-rate quota (TRQ) have summed to 226,571 MTRV (or 249,752 STRV) through the end of February, or only about 25 percent of the 2013/14 forecast. The Sugar and Sweetener Outlook estimates that, similar to last year, most sugar from Mexico—about 70 percent through the end of January—has been imported by cane sugar refiners. This is in stark contrast to the 42 percent estimated for the first 5 years since the implementation of the North American Free Trade Agreement (NAFTA) sweetener provisions. With the expected decrease in imports from Mexico for the rest of the year, the pace of raw sugar TRQ imports should pick up. There was no change to the raw sugar TRQ shortfall forecast, which is still at 250,000 STRV.

The USDA increased its projection of 2013/14 sugar exports by 75,000 STRV to 325,000 STRV. According to SMD, exports in January 2014 were 94,473 STRV, about five times the average of the first 3 months of the fiscal year. The surge was the result of an expected to be one-time shipment to a destination other than Mexico. The pace for the remaining 8 months of the fiscal year should be in the range of the first 3 months.

The USDA decreased its projection of 2013/14 sugar deliveries made under the sugar-containing products component of the re-export imports program. Because of extremely low deliveries of 11,731 STRV through January, the USDA reduced its full-year projection by 50,000 STRV to 100,000 STRV. Even with this reduction, the pace of deliveries will have to pick up substantially.

The USDA increased its projection of deliveries for human consumption by 110,000 STRV to 11.600 million STRV. The increase was supported by the pace through the first 4 months of the fiscal year. Table 2 shows a revised version of the Sugar and Sweetener Outlook consumption model that also confirms the basis for the increase. The point of the revision was to include an upward adjustment to the equation for cane sugar deliveries. As seen in figure 1, these deliveries were only about 5 million STRV in 2007/08 but have grown substantially since then. If the delivery pace for the remaining 8 months of the 2013/14 year parallels the pace for the first 4 months, total deliveries by cane sugar refiners and processors should be about 6 million STRV, about the same as projected in the table 2 model. As indicated in table 2, direct consumption imports (DCI) by entities that do not report to USDA would total under a million STRV. The previous version of the table 2 model supported the 11.600 million STRV total but also forecast DCI at over 1.200 million STRV. Given the higher proportion of imports from Mexico going to refiners, the higher DCI projection did not seem realistic. As it stands now, 2013/14 DCI should be about 4.5 percent higher relative to 2012/13, reaching 970,000 STRV.

Ending stocks are projected as the difference between total supply (14.057 million STRV) and total use (12.376 million STRV) for 1.682 million STRV. This projection is 142,000 STRV below last month’s projection. The stocks-to-use ratio is projected at 13.6 percent, reduced from last month’s 14.9 percent.

Mexico Sugar and High Fructose Corn Syrup

Although the USDA made no changes to 2013/14 Mexico sugar supply and use (table 3), production and consumption trends through week 22 of the crop year (March 1) are not encouraging that this will remain the case next month. Figure 2 shows weekly sugarcane production for 2013/14 compared with 2010/11 and 2012/13. As the figure shows, harvested sugarcane was well below the trends of the other years in 3 consecutive weeks in late December – early January (weeks 13-15) and has not fully recovered. According to Mexico’s Comite Nacional Para El Desarrollo Sustentable de la Caña de Azucar (Conadesuca), sugarcane production is running about 5.6 percent lower than forecast (26.924 million metric tons (mt) compared with 28.529 million mt). One question is whether this gap can be closed before the end of the season in June. For this to occur, weekly production will have to resemble the shape of 2012/13 production with its large-sized right tail. Even so, another question is whether the sucrose content of the crop to be harvested is sufficiently high for recovery to reach expected production.

Table 4 shows components of three projections of Mexico sugar production: the first (and only) estimate made by Conadesuca in November 2013, the USDA forecast made last month, and a recent forecast made by the Sugar and Sweetener Outlook. The Conadesuca and USDA forecasts retain the early-season harvested area projection of 819,065 hectares. The Sugar and Sweetener projection lowers the area projection based on the trends exhibited in figure 3. That figure shows the percentage of the crop harvested through comparable harvest weeks 16-22 for2013/14, the previous year 2012/13, and the average of the 5 preceding years. If one assumes 2013/14 total area at 819,065 hectares, there is a substantially lower percentage of 2013/14 area harvested during comparable weeks in previous years. Unless the pace begins to accelerate beyond that shown in the figure, the 2013/14 harvested area projection is unlikely to be met. Based on an optimistic assumption (that is, that 819,065 is the most likely outcome but that a lower total is possible, given historical patterns), the Sugar and Sweetener Outlook projects area at 789,930 hectares, about 3.6 percent lower than the Conadesuca or current USDA estimate.

Figure 4 shows cumulative sugarcane yields throughout the harvest since 2010/11. The cumulative yields decline as the season progresses. The yield profile for 2012/13 was strong, but those for 2010/11 and 2011/12 were substantially weaker. The 2013/14 profile is in between the other years. Based on the average ratio of the week 22 yield to the final yield, and allowing for some statistical adjustments, the Sugar and Sweetener Outlook projects a 2013/14 final yield of 69.7 mt/ha, over 1 mt/ha lower than the others. Projected area and yield combine to imply sugarcane production at 55.062 million mt, about 5.2 percent lower than the other projections.

A fourth component of Mexico sugar projection is sucrose recovery. Last month, the USDA and Conadesuca estimates were close for sugarcane production but differed significantly for recovery: 10.91 percent for USDA and 11.54 percent for Conadesuca. Figure 5 shows the trend pattern for cumulative recovery through the harvest season. The cumulative rate rises at a declining rate before completely flattening out toward the end of the season. Figure 5 also contrasts the expected Conadesuca recovery profile with the actual profile through week 22. Based on average interim-to-final ratios and associated variance, the Sugar and Sweetener Outlook projects a final recovery of 11.00 percent. The USDA and Sugar and Sweetener projections are about a standard deviation apart, but both are substantially below the Conadesuca projection.

Putting all the components together, the Sugar and Sweetener Outlook analysis suggests 2013/14 production at 6.058 million mt. Because there is still much time left in the season, the USDA decided to retain its February projection for the March 2014 WASDE.

Last month the USDA lowered its projection of sugar deliveries for human consumption by 100,000 mt to 4.306 million mt, and this projection was kept for March. Conadesuca’s estimate of deliveries October through January total 1.338 million mt (fig. 6). This total is about 97 percent of the last year’s corresponding total through the same 4-month period but seems to represent a gain because the 3-month ratio was 95.5 percent.

High Fructose Corn Syrup (HFCS) deliveries have totaled only 456,370 mt (dry weight) through the end of January, down 17.3 percent compared with last year. USDA’s full-year 2013/14 projection of HFCS deliveries is 1.491 million mt, about 4.9 percent lower than last year. Although USDA expects the pace of deliveries to pick up, this revival will have to start soon for the USDA projection to hold.

Combined sugar and HFCS deliveries for human consumption have totaled 1.794 million mt through January, down 7.1 percent compared with the same period last year. Although January was the target implementation date for the new special tax on sweetened soda drinks and select food items, it does not seem likely that a reduction this large could be attributable to the tax. Because HFCS deliveries are more readily verifiable because most HFCS is imported, sugar deliveries may be understated. The data ambiguity will not likely be resolved until the data are fully audited under Conadesuca direction.

Published by USDA Economic Research Service

DOWNLOAD REPORT:- Download this report here

Share This


Related Reports

Reports By Country

Reports By Category

Our Sponsors