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USDA Sugar and Sweeteners Outlook

18 June 2014

USDA Sugar and Sweeteners Outlook - 18 June 2014USDA Sugar and Sweeteners Outlook - 18 June 2014

USDA Sugar and Sweeteners Outlook

NAFTA Sugar June 2014

The Mexico 2013/14 forecast for sugar production is lowered from last month by 250,000 metric tons (MT) to 6.10 million MT as output continues to lag well behind last year’s pace. Given lower supplies and sharply higher domestic prices, total exports are reduced by 121,000 MT to 2.278 million. However, exports to the United States are raised based on the pace to date, and exports to the rest of the world are forecast lower. Ending stocks fall by 129,000 MT to 818,000 MT, or 19.0 percent of consumption. For 2014/15, beginning stocks and exports are forecast lower. However, relatively higher prices in the U.S. sugar market provide the incentive for increased 2014/15 exports to the United States.

Total 2013/14 U.S. supply is forecast to rise by 261,000 short tons, raw value (STRV), with a 10,000 STRV increase in sugar from sugarcane production in Texas and a 251,000 STRV increase in imports. Imports under the re-export program are raised 100,000 STRV, based on industry estimates, and imports from Mexico are increased 151,000 STRV. With total use unchanged, ending stocks are forecast to rise to 15.0 percent of use, compared with 12.9 percent in May.

Total 2014/15 U.S. supply is projected up 811,000 STRV, with increases in beginning stocks and imports more than offsetting reduced production. Beginning stocks, at 1.857 million STRV, are up 261,000 STRV. Total sugar production is lowered 140,000 STRV, due to lower sugarcane production in Florida and Louisiana based on processors’ first projections for 2014/15. Total imports are forecast 690,000 STRV above May due to increased shipments from Mexico. With no changes in total use, ending stocks are forecast to rise to 15.8 percent of 2014/15 use from 9.1 percent.

World Sugar

On May 22, 2014, the U.S. Department of Agriculture (USDA) released the World Production, Supply, and Distribution (PSD) for centrifugal sugar. Included in the May 2014 sugar PSD were new supply and use estimates for the 2013/14 marketing year, first projections of supply and use for 2014/15, and some revisions to older data. The USDA bases most of its estimates and projections on information contained in various Sugar Annuals published through the Global Agricultural Information Network (GAIN) of USDA’s Foreign Agricultural Service (FAS).

Table A-1 in the appendix shows supply sources (beginning stocks, production, and imports) and use (exports, domestic consumption, and ending stocks) for major countries and aggregate regions. World exports are projected in 2014/15 to be at about the same level as in 2013/14, or 55.24 million metric tons raw value (MTRV). Exports from Brazil in 2014/15 are expected at 25.250 million MTRV, a reduction of about 3.6 percent from 2013/14.

The USDA forecasts Brazil Center/South sugarcane production at 575 million mt, 3.5 percent lower than last year, and production in the North/Northeast at 54 million mt, about the same as last year. Center/South production prospects have been negatively affected by drought and below-average replanting. The level of total reducing sugars (TRS) has also been affected by the weather, as well as diminished by increased reliance on higher mechanization in harvesting, and has been now forecast 131.5 kilograms, 2 kilograms lower than in 2013/14. The USDA projects that the percentage of TRS going to sugar will increase to 46.5 percent, up from 45.5 percent in 2013/14. Because hydrous ethanol has lost much of its competitive strength to gasoline, whose price is set lower than equilibrium by the Brazilian Government, sugar production is favored and the resulting ethanol production is more for anhydrous ethanol blended with gasoline. All in all, 2014/15 sugar production is forecast at 36.8 million MTRV, down 1 percent nationally. Domestic consumption is forecast to increase by 240,000 MTRV due to population growth and increased demand by food processors. Because stockholding is insignificant, exports balance out supply and demand. Raw sugar should account for 20.2 million MTRV, with the remainder exported as refined sugar. With the publication of the sugar PSD, the USDA noted the following developments in other sugar producing and trading countries:

Thailand: The USDA projects sugar production will decline 400,000 MTRV to 11.0 million MTRV as sugarcane yields return to normal, more than offsetting an increase in area. Consumption continues to trend higher, driven by rising household and industrial use. Exports are forecast to jump to a record 8.3 million MTRV based on growing Asian demand, particularly from Indonesia and Cambodia. Exports will likely benefit from the Association of Southeast Asian Nations Economic Community Agreement.

Australia: The USDA projects Australian 2014/15 sugar production slightly higher at 4.4 million MTRV due to improved yields, better rainfall, higher dam-storage levels in sugarcane regions, and an easing of drought conditions. Australian sugar exports are projected at 3.1 million MTRV in 2014/15, slightly higher than in the previous 2 years. Access to Korea, Australia’s largest market, was increased under a free trade agreement in April 2014.

Guatemala: The USDA projects Guatemalan sugar production for 2014/15 at 2.9 million MTRV, the same as the record high in 2013/14. Total exports for 2014/15 are forecast at 2.0 million MTRV. The Guatemalan sugar industry continues to be one of the most efficient in productivity and port loading capacity (2,200 MT/hour). Guatemala has the largest storage capacity in the Central American region (431,000 MT).

India: The USDA forecasts sugar production to increase nearly 900,000 MTRV to 27.9 million MTRV due to higher yields. With consumption expected to continue its strong rise, exports are forecast to fall to 1.5 million MTRV to meet domestic demand.

Pakistan: The USDA forecasts 2014/15 sugar production at 4.86 million tons, a 7.0 percent decrease from the current-year production estimate. Sugar consumption for 2014/15 is forecast at 4.5 million MTRV, slightly higher than last year’s estimate, and exports are forecast at 400,000 MTRV. Ending stocks are expected to increase to 1.14 million MTRV. The USDA revised the 2013/14 production estimate up 245,000 MTRV to a record 5.2 million MTRV, attributable to increased acreage, good rains, and an improvement in sugar recovery rate.

European Union: The USDA forecasts production at 16.3 million MTRV, up 200,000 MTRV based on both increased sugarbeet area and yield. As consumption continues to trend higher, imports are forecast to grow by 250,000 MTRV to 3.8 million MTRV. Exports remain at 1.5 million MTRV, limited by the sugar export ceiling in the World Trade Organization.

China: The USDA forecasts production at 13.7 million MTRV, down 600,000 MTRV based on lower expected crop yields. Rising consumption, which outpaces production, and lower imports are expected to draw down stocks.

Russia: The USDA forecasts steady production at 4.4 million MTRV. An increase in area is offset by reduced yield. Consumption and imports are forecast down slightly.

South Africa: The USDA forecasts 2014/15 sugar production at 2.5 million MTRV, 3.0 percent higher than in 2013/14. With the expectation of sufficient sugar stocks at the end of the year, exports are projected to total about 1.0 million MTRV of sugar in 2014/15. Sugar imports are expected to decline to about 250,000 MTRV in 2014/15, due to an expected increase in the sugar import tariff.

Swaziland: The USDA forecasts 2014/15 production at 725,000 MTRV, based on a 6.0 percent increase in sugarcane production stemming from increases in area. Exports, mainly to the European Union, are expected to increase by about 3.0 percent to 385,000 MTRV. In 2013/14, sugar production had increased by 3.0 percent from the previous year to an estimated 679,934 MTRV.

Trends in World Sugar Supply and Use

The largest change predicted by USDA is growth in world sugar consumption by over 2.5 million MTRV. World production is shown lower, while expansion in consumption drew down the stocks built up from the previous 2 years. Figure 2 shows world sugar production, consumption, and ending stocks from 2000/01 through a projected 2014/15. 

Published by USDA Economic Research Service

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