USDA Sugar and Sweeteners Outlook

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19 June 2012

USDA Sugar and Sweeteners Outlook - June 2012

U.S. deliveries of total sweeteners for human food and beverage use for 2011 are estimated at 20.381 million tons, almost the same as the deliveries in 2010 of 20.387 million tons. Refined sugar deliveries increased by 1.6 percent, while corn sweetener deliveries fell by 1.7 percent.

Within the corn sweetener category, high fructose corn syrup (HFCS) deliveries fell by 1.6 percent. Since 2002, HFCS deliveries have fallen by 1.613 million tons, dry weight, or 17.8 percent. Honey deliveries increased by 5.6 percent, and other edible syrups stayed the same. On a per capita basis, U.S. sweetener deliveries for 2011 were 130.2 pounds, down slightly from 2010 but down 18.8 pounds from the 149.0 pounds in 2000. Per capita sugar deliveries for human consumption in 2011 were 66.2 pounds, the highest level since 1999, while corn sweetener deliveries for human consumption, at 62.5 pounds, were at their lowest level since 1985.

The Economic Research Services (ERS) has made major revisions to its Loss-Adjusted Food Availability data. These data adjust the Food Availability data to account for losses from farm to retail, at retail, and at the consumer level. The loss estimate for refined sugar and corn sweeteners (including high fructose corn syrup) increased substantially from 20 percent to 34 percent, while the estimates for honey and edible syrups decreased from the 20 percent formerly used by ERS to 15 percent.

After adjusting for sweetener food and beverage losses prior to consumer intake, per capita sweetener intake for 2011 is at 79.1 pounds, down 0.8 pounds from 2010 and 9.9 pounds from 2000. In terms of daily calories, the 2011 intake level is 375 calories—a reduction in sweetener intake of about 11 percent compared with the 422 calories estimated for 2000. The 375 daily calories consumed in 2011 are far less than the 453 calories that would have been calculated from the previous set of loss coefficients. These new estimates will likely have implications for the debate on factors behind the average weight gain of Americans and the obesity “crisis.”

On June 12, 2012, the U.S. Department of Agriculture (USDA) released its latest U.S. and Mexico sugar supply and use estimates for fiscal year (FY) 2012 and projections for FY 2013 in the World Agricultural Supply and Demand Estimates (WASDE) report. The USDA increased its estimate of 2011/12 Mexico sugar production to 5.025 million metric tons (mt), an increase of 125,000 mt. The USDA also increased its estimate of 2012/13 Mexico sugar production to 5.300 million metric tons (mt). The USDA did not change its 2011/12 estimates or 2012/13 projections of imports, deliveries, or endingstock levels. The increases in production, therefore, result in larger expected sugar exports in both years. The export estimate for 2011/12 is 984,000 mt, and the export projection for 2012/13 is 1.126 million mt. Almost all of this sugar is expected to go to the U.S. market. The USDA revised U.S. sugar imports from Mexico accordingly.

World Sugar

On May 24, 2012, the U.S. Department of Agriculture (USDA) released the World Production, Supply, and Distribution (PSD) for centrifugal sugar. Included in the May 2012 sugar PSD were new supply and use estimates for the 2011/12 marketing year, first projections of supply and use for 2012/13, and some revisions to older data. The USDA bases most of its estimates and projections on information contained in various Sugar Annuals published through Global Agricultural Information Network (GAIN) of USDA’s Foreign Agricultural Service (FAS). These reports for major sugar-producing and consuming countries were reviewed in last month’s Sugar and Sweetener Outlook, and summaries are provided here in table 1 for major sugar exporters (Brazil, Thailand, Australia, Guatemala, and South Africa) and in table 2 for other major sugar-producing and trading countries (India, China, European Union, and Russia).

Table 3 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 2012/13 to increase 507,000 metric tons raw value (MTRV) to 58.326 million MTRV. Exports from Brazil are expected to grow 600,000 MTRV to 25.25 million MTRV. Brazil sugarcane production is expected to rise by 4 percent, and a greater proportion of the crop—48.63 percent compared with 48.07 percent in 2011/12—is forecast to be used for producing sugar instead of ethanol due to better returns from exporting sugar. Resulting sugar production is projected 4.6 percent higher than last year, up to 37.8 million MTRV.

Sugar production in India for 2012/13 is projected at 29.0 million MTRV. India is in the third year of recovery from the low point of the latest sugar cycle, when production was only 15.95 million MTRV in 2008/09. India is forecast to be a significant exporter of 2.5 million MTRV in 2012/13. Export growth is constrained somewhat by an expected rebuilding of sugar stocks by 750,000 MTRV to 7.28 million MTRV. This ending-year stock level corresponds to about 3 months of domestic consumption. No imports are forecast in 2012/13.

Strong sugar production in Thailand is expected to continue into 2012/13, projected at 10.85 million MTRV, up from 10.415 million MTRV in 2011/12 and 9.663 million in 2010/11. Exports are projected at 9.3 million MTRV, up 300,000 MTRV from 2011/12 and up 2.7 million MTRV from 2010/11.

Other major sugar exporters are expected to contribute to overall export supply expansion in 2012/13. Production in both Australia and South Africa is recovering from the extreme weather conditions experienced in 2010/11— excessive rainfall and cyclone damage in Australia and extreme dryness in South Africa. Australian exports are expected to rise 150,000 MTRV to 3.0 million MTRV, and South African exports are expected to rise to 600,000 MTRV, up dramatically from last year’s 330,000 MTRV. Guatemala is expected to export 1.725 million MTRV, up 50,000 MTRV, and Colombia is expected to export 880,000 MTRV, up 20,000 MTRV. Colombian sugar production and exports are constrained by increasing use of sugarcane for ethanol production.

Russia is expected to increase sugar imports by 310,000 MTRV to partially offset an expected decline in production of 450,000 MTRV. However, forecast Russian imports of 1.2 million MTRV in 2012/13 are only about 50 percent of the average import level over the period 2008/09 through 2010/11. China is forecast to import 2.5 million MTRV in 2012/13—additional import growth is limited by increased use of high fructose syrup.

The European Union (EU) is forecast to import 3.3 million MTRV in 2012/13, about 100,000 MTRV less than estimated for 2011/12. Most imports come from traditional developing-country suppliers covered under European Partnership Agreements and under the Everything-But-Arms agreement. Significant imports totaling about 1.1 million MTRV enter under the CXL and Balkan tariff-rate quotas. Although important in 2011/12, additional import tenders are not expected at high levels in 2012/13. Regulated EU beet sugar production for 2012/13 is forecast at 15.5 million MTRV. This consists of 14.2 million MTRV of EU quota sugar and 1.3 million MTRV for beet sugar exports. Beet sugar exports are lower than the 2.3 million authorized for 2011/12. Approval of out-of-quota sugar for the domestic food market in 2012/13, which was granted in 2011/12 when 700,000 MTRV was approved for food use, is not expected. Additional EU beet sugar production beyond the regulated market is expected to total 3.5 million MTRV. This sugar is used for nonfood industrial uses, including the biochemical and bio-ethanol industries. Sugar imports for industrial uses will likely be limited due to the high level of unregulated over-quota sugar in the EU.

U.S. sugar imports are difficult to predict because of the role of policy. Imports for 2012/13 are projected at 2.595 million MTRV. All other factors constant, this level of imports produces an ending stocks-to-use ratio of 10.3 percent. If policymakers were to decide to target the ending stocks ratio at 14.5 percent, imports could increase by 456,000 MTRV to a total of 3.051 million MTRV. This would be about 277,000 MTRV less than estimated imports for 2011/12.

Trends in World Sugar Supply and Use

Figure 1 shows world sugar production, consumption, and ending stocks from 1989/90 through 2012/13. World sugar production and consumption have been increasing at about the same rate: 2.03 percent for production and 1.88 percent for consumption. Consumption growth has been fairly steady from year to year, whereas production growth has shown more variability. Since 1999/2000, world sugar production has increased, on average, 2.715 million MTRV per year. Corresponding growth in Brazil has been 1.672 million MTRV per year, or 62 percent of the total. Ending stocks have shown more cyclical activity—increases of 2 to 3 years’ duration, followed by decreases of 1 to 3 years’ duration. However, since 2008/09, ending stocks have been flat, at between 29.849 and 31.611 million MTRV. Ending stocks for 2012/13 are projected at 33.082 million MTRV, still low, but higher than the last few years.

Figure 2 shows the world sugar surplus/deficit, calculated as the difference between world sugar production and consumption, and the ending-year stocks-to-use ratio. In the 23 years since 1989/90, world sugar has been in surplus (that is, production exceeded consumption) 17 times. The largest deficit of 9.67 million MTRV occurred in 2008/09, when Indian production decreased 12.68 million MTRV from the previous year, or 44 percent. The USDA estimates 2011/12 world sugar in surplus at 10.002 million MTRV and projects a 2012/13 surplus of 10.692 million MTRV.

In the record world sugar deficit year of 2008/09, the world ending-stocks-to-use ratio fell to 20.6 percent, which at the time was the lowest level since 1993/94. In spite of the growth of sugar world surplus, the estimated ratio for 2011/12 is only 19.6 percent and the projected ratio for 2012/13 is 20.2 percent.

Brazil and the World Sugar Export Market

Figure 3 shows Brazil’s share of the world export market for raw, refined, and total sugar since 1997/98. Brazil gained in its world export market share fairly consistently through 2009/10, when its share of world raw sugar exports was 60.8 percent and of world total sugar exports was 46.8 percent. Brazil’s share has since fallen to 56.6 percent for raw sugar in 2011/12, and its total sugar share has fallen to 42.6 percent. The USDA projects 2012/13 shares for Brazil close to those of 2011/12.

LMC International reports that Brazilian Center/South sugar production costs, especially in dollar terms, have increased significantly the last couple of years. Various factors are responsible: Strong Brazilian economic growth has added to rising labor costs; higher input prices; the poor technical performance of the sugar industry over the last 2 years; and the fact that the Brazilian real has retained its high value relative to the U.S. dollar.

Figure 4 shows the evolution of these costs in both dollars and Brazilian reals. Brazilian real sugar production costs have been increasing consistently, though modestly, since 1997/98. Production costs were only 17.4 percent higher in 2010/11 than in 2004/05 but are projected to be 43.6 percent higher in 2011/12. Dollar production costs showed declines through 2002/03 when the real was depreciating against the dollar. Since then, the real has appreciated significantly and has caused dollar production costs to rise. The dollar production cost in 2010/11 was estimated 95.1 percent higher than in 2004/05, and the cost in 2011/12 is projected to be 142.4 percent higher.

Brazil’s Center/South region is still a low-cost production area, but producers elsewhere have become much more competitive. Figure 5 shows an index of the production-weighted costs of major export competitors to Brazil (Australia, Colombia, Guatemala, South Africa, and Thailand) and also India (forecast to be a major exporter in 2012/13) relative to Center/South production costs. In 2004/05, the exporters’ costs were about 76.1 percent higher than in Brazil, while in India, the costs were 143.7 percent higher. By 2010/11, the exporters’ costs were estimated only 20.5 percent higher. The projection for 2011/12 is for these costs to be only 11.3 percent higher. Even projected Indian production costs in 2011/12 are only 33.6 percent higher than those in Brazil’s Center/South.

An article published in the March 2011 Sugar and Sweetener Outlook examined the relationship between Center/South production costs and world sugar prices. Technically speaking, Brazilian production costs measured in dollars and world sugar prices (the nearby no. 11 raw sugar futures price from the Intercontinental Exchange) were shown be cointegrated. This means that there is a medium- to long-run equilibrium relationship between Brazilian production costs and world prices. Because of Brazil’s large share of the world sugar market, its costs measured in dollars push prices in the same direction over time. With the prediction of large world sugar surpluses this year, the extent to which world sugar prices can fall will be limited because of this Brazilian “large-country effect.” Beside sugar market fundamentals, important variables to focus on include real-dollar exchange rate movements, aggregate economic activity in Brazil, world oil prices, any change to the policy-determined price of gasoline in Brazil, and other systematic commodity price trends affecting investors’ decisionmaking.

U.S. Sweetener Demand

Each year the Sugar and Sweetener Outlook of the Economic Research Service (ERS) makes calendar year estimates of total sweetener deliveries that are available for food and beverage consumption by U.S. consumers. These sweeteners include refined sugar; the corn sweeteners of high fructose corn syrup (HFCS), glucose syrup, and dextrose; honey; and other edible syrups, including maple syrup and maple sugar. Table 4 shows the new preliminary estimates for 2011, along with some revisions for prior years.

U.S. deliveries of total sweeteners for human food and beverage use for 2011 are estimated at 20.381 million tons, almost the same as the deliveries in 2010 of 20.387 million tons. Refined sugar deliveries increased by 1.6 percent, while corn sweetener deliveries fell by 1.7 percent. Within the corn sweetener category, HFCS deliveries fell by 1.6 percent. Since 2002, HFCS deliveries have fallen by 1.613 million tons, dry weight, or 17.8 percent. Honey deliveries increased by 5.6 percent, and other edible syrups stayed the same.

On a per capita basis, U.S. sweetener deliveries for 2011 were 130.2 pounds, down slightly from 2010 but down 18.8 pounds from the 149.0 pounds in 2000. Per capita sugar deliveries for human consumption in 2011 were 66.2 pounds, the highest level since 1999, while corn sweetener deliveries for human consumption at 62.5 pounds were at their lowest level since 1985.

Sugar contained in net imported products is usually excluded in estimating U.S. per capita sweetener deliveries. Before 1995, sugar contained in imports was offset by sugar contained in U.S. food exports, indicating only a minor positive adjustment to total deliveries. Beginning in 1995-96, U.S. imports of sugar-containing products started increasing at a faster rate than exports of the products. This trend continued until 2006 but has since been reversed. For 2011, trade in sugar-containing products contributed an estimated 627,897 tons to sweeteners available for consumption, or 4.0 pounds per capita. This is down from the high of 5.4 pounds in 2006.

Table 5 provides more detail about sugar in imported and exported products. Sugar in imported products in 2011 is estimated at 1.240 million tons, a 4-percent increase over 2010. Sugar imported in cocoa and cocoa products showed the largest year-over-year increase, at 25,244 tons, followed by sugar in imported bread, pastries, and cakes of 10,337 tons and sugar in beverages of 9,851 tons. Sugar in sugar confectionery fell by 3,678 tons. Sugar in exported products, adjusted for sugar imported under USDA re-export-import programs, is estimated at 627,897 tons in 2011, up about 11.3 percent over 2010.

Data in the next-to-last column of table 4, estimated by SRI Consulting and published in their Chemical Economics Handbook (CEH), show the sucrose equivalent availability for human consumption of high-intensity sweeteners (HIS) saccharin, aspartame, acesulfame K, sucralose, stevia-products, and cyclamate.1 The supply of these sweeteners for food consumption has been growing over time, from 3.079 million tons in 2002 to 4.112 million tons in 2011. On a per capita basis, the growth has been from 21.4 pounds in 2002 to 26.3 pounds in 2011.

Aspartame has the largest market share of all these sweeteners, but its share has been declining as the consumption of diet carbonate beverages has declined. Also, aspartame’s share of the tabletop-use category has fallen significantly, due primarily to competition from sucralose. The aspartame market share is now estimated at less than 50 percent. Saccharin’s share of the market is about 18 percent and is on a slow decline. Sucralose use is over 20 percent of the market; its share grew rapidly over a short period. Its forecast share growth is positive but has settled down to about one-half of a percentage-point in market share growth each year through 2014. Consumption of rebaudioside A, though growing steadily, is still less important than consumption of the other sweeteners.

Calculating Per Capita Consumption: New Loss Coefficients for Added Sugars

The Food Availability (per capita) Data System developed by USDA’s Economic Research Service (ERS) tracks annual food and nutrient availability in the United States, beginning with 1909 data, for several hundred commodities, including sugar and other added sweeteners (as discussed above). Because the core Food Availability data series in the system overstates actual consumption, ERS added another series to the system—the Loss-Adjusted Food Availability data—which adjusts the Food Availability data to account for nonedible food parts and food losses, including losses from farm to retail, at retail, and at the consumer level. This second data series more closely estimates per capita food intake.2

Under an agreement with ERS, RTI International has proposed new estimates for the data series on loss of the edible share of food at the consumer level.3 These proposed estimates cover food loss both at home and away from home for most of the commodities included in the series, including losses during cooking and preparation, discards due to preparation of too much food, disposal of food packages with expired use-by dates, spoilage, and plate waste.

RTI conducted the first of two phases of this study by comparing estimates of total U.S. retail household purchases with total U.S. at-home consumption for each food in ERS’s Loss-Adjusted Food Availability series. The main data sources included The Nielsen Company’s Homescan® data for 2004 (food purchases from retail outlets) and the National Health and Nutrition Examination Survey (NHANES) for 2003-04 (food consumption). RTI also calculated alternative estimates of food loss by comparing the total quantity available at the consumer level in the Loss- Adjusted Food Availability series with total reported consumption in NHANES. RTI relied on several supplemental data sources to adjust the purchase data to facilitate comparisons with the consumption data. In addition, RTI took direct measurements of count data (e.g., produce sold by count rather than weight), inedible percentages of food, and moisture gains for foods when data were not available from one of the data sources.

RTI derived loss estimates for refined sugar and for honey using the available data series. Results are shown in table 6. The loss estimate for refined sugar increased substantially from 20 percent to 34 percent, while the estimate for honey decreased from the 20 percent used by ERS to 15 percent. RTI did not estimate loss coefficients for the corn sweeteners—high-fructose corn syrup, glucose syrup, and dextrose—because these sweeteners are used only as ingredients in other products. Although RTI proposed using the same estimate as that calculated for honey, ERS, in consultation with representatives of the sweetener industry, determined that corn sweetener losses much more closely resemble losses from refined sugar. The corn sweetener loss coefficient was set at 34 percent. The loss coefficient for edible syrups was set to 15 percent, the same as for honey.

Implications for Consumer Per Capita Sweetener Intake

Table 7 shows the derivation of intake consumption for refined sugar, high fructose corn syrup, and the other added sugars. The primary weight (first data column) is taken from the sweetener availabilities seen in the bottom panel of table 4. Although there are four loss categories, only two of these are relevant for added sugars: loss from retail to consumer level and the loss at the consumer level for uneaten portions, spoilage, etc. The retail-to-consumer loss is estimated at 11 percent for all sweeteners. Because this loss category was not analyzed in the RTI study, its value has not changed. New loss-at-the-consumer-level coefficients (table 6) are used in adjusting weight at the consumer level (fifth data column) to per capita consumption, adjusted for loss (eighth data column). The next two columns translate the annual consumption (pounds) into daily levels, i.e., ounces and grams per day. The last two columns show the implied daily calorie consumption and the corresponding number of equivalent teaspoons of sugar consumed daily.

Per capita sugar consumption for 2011 is estimated at 41.2 pounds. This amount is up slightly from last year and about 3.5 percent higher than in 2000. Per capita HFCS consumption has been decreasing steadily since 2000. Its value in 2011 is estimated at 27.9 pounds, down 0.7 pounds from 2010 and down 8.9 pounds, or 24 percent, since 2000. Consumption of other added sugars has decreased as well. Overall, per capita sweetener consumption intake for 2011 is at 79.1 pounds, down 0.8 pounds from 2010 and 9.9 pounds from 2000. In terms of daily calories, the 2011 intake level is 375 calories—a reduction in sweetener intake of about 11 percent compared with the 422 calories estimated for 2000.

Table 8 shows how the adoption of new consumer loss estimates have affected the calculation of intake for sugar, HFCS, other added sugars, and the total. Per capita intake is now estimated at about 17 percent less than formerly. The 375 daily calories consumed in 2011 calories are far less than the 453 calories calculated from the previous set of loss coefficients. These new estimates will likely have implications for the debate on factors behind the average weight gain of Americans and the obesity “crisis.”

Sugar and High Fructose Corn Syrup in the North American Free Trade Area (NAFTA)

On June 12, 2012, the U.S. Department of Agriculture (USDA) released its latest U.S. and Mexico sugar supply and use estimates for fiscal year (FY) 2012 and projections for FY 2013 in the World Agricultural Supply and Demand Estimates (WASDE) report.

Mexico Sugar and High Fructose Corn Syrup

The USDA increased its estimate of 2011/12 Mexico sugar production to 5.025 million metric tons (mt), an increase of 125,000 mt. Production through June 9, 2012 has amounted to 5.017 million mt. During the week of June 3-9, there were 11 factories reporting production. Three of these factories completed their production season during the week, leaving eight still producing. Although the pace of sugarcane production at 45.980 million mt is 4.5 percent ahead of the corresponding period last year, low sucrose recovery of 10.91 percent places 2011/12 sugar production at 2.93 percent less than in 2010/11.

The USDA increased its projection of 2012/13 production by 160,000 mt to 5.3 million mt. The Foreign Agricultural Service (FAS) post in Mexico City reports that growers are optimistic about next year’s crop because of better weather that is expected to continue through the current growing season. Frost-damaged sugarcane is not the problem that it was for the 2011/12 crop in certain producing areas. Harvested area is expected to be at the same level or slightly higher than in 2011/12. Even if sugarcane yield ends up at this year’s 65.8 tons per hectare, a sucrose recovery of about 11.5 percent would produce the expected 2012/13 total. Sucrose recovery for the 4 years preceding the 2011/12 season averaged 11.49 percent.

The USDA did not change its 2011/12 estimates or 2012/13 projections of imports, deliveries, or ending-stock levels. The increases in production, therefore, result in larger expected sugar exports in both years. The export estimate for 2011/12 is 984,000 mt, and the export projection for 2012/13 is 1.126 million mt. Almost all of this sugar is expected to go to the U.S. market. (The USDA assumes about 10,000 mt going to other destinations in both years).

The USDA estimates 2011/12 sugar deliveries for human consumption at 4.1 million mt. This level is close to the forecast of 4.083 million mt by the Comite Nacional Para El Desarrollo Sustentable de la Cana de Azucar (CNDSCA) but is higher than the recent forecast of 3.955 million mt made by the Camara Nacional de las Industrias Azucarera y Alcoholera (Sugar Chamber). The delivery pace through April 2012 is only 0.3 percent higher than 2010/11, at 2.447 million mt.1 If this pace continues, 2011/12 deliveries would be close to the level forecast by the Sugar Chamber.

The USDA decided not to change the delivery estimate for the June 2012 WASDE. Since the beginning of May, the estandar sugar price in Mexico City has fallen 15.6 percent from 595 pesos for a 50-kilogram bag to 502 pesos in the first week of June. The corresponding price for refinado sugar has fallen 12.4 percent from 688.33 pesos per 50- kilogram bag to 603 pesos. Market observers have suggested that these price reductions were due to processors selling inventory to raise funds with which to pay growers after the recent setting of the payment price due to sugarcane growers.

The CNDSCA reports deliveries of high fructose corn syrup (HFCS) through the end of April at 977,314 mt, dry basis. This cumulative amount is 9.33 percent more than in the corresponding period a year earlier. HFCS is capturing about 28.5 percent of the combined sugar-HFCS market. About 74 percent of the HFCS is imported, mostly from the United States. The USDA estimate of 2011/12 HFCS deliveries is 1.72 million mt. The USDA estimate is higher than the CNDSCA estimate of 1.636 million mt (about the same as in 2010/11) but lower than the Sugar Chamber estimate of 1.763 million.

U.S. Sugar and High Fructose Corn Syrup

The USDA increased its FY 2012 estimate of imports from Mexico by 147,000 short tons, raw value (STRV), to 1.139 million STRV. The USDA also increased its FY 2013 projection of imports from Mexico by 187,000 STRV to 1.304 million STRV. Both of these increases were the result of expected increases in sugar production in Mexico. The only other changes were upward adjustments to cane sugar production in Florida and Texas to reflect final season production. FY 2012 production in Florida is estimated at 1,827,770 STRV and 149,818 STRV in Texas. Ending stocks for FY 2012 are estimated at 1.825 million STRV, implying a stocks-to-use ratio of 15.5 percent. Ending stocks for FY 2013 are projected at 1.561 million STRV, implying a stocks-to-use ratio of 13.1 percent. If the additional specialty sugar portion of the refined sugar tariff-rate quota were set in FY 2013 as in FY 2012, FY 2013 ending stocks would be projected 100,000 STRV higher than they currently are. This would result in a stocksto- use ratio of 14.0 percent, close to the level that the USDA considers reasonable, that is, 14.5 percent.

The decline in deliveries of HFCS has been slowing. If trends since the beginning of 2012 continue, FY 2012 deliveries of HFCS42 could be forecast at 2.799 million tons, only 0.76 percent less than in FY 2011, and HFCS55 deliveries would be forecast 4.439 million tons, down 1.5 percent. Figure 6 shows the overall FY 2012 decline of slightly over 1 percent to be the lowest since FY 2004. Several U.S. companies have announced intentions to switch from using sugar to HFCS. These include ConAgra (Hunt’s Ketchup) and Kraft (Capri Sun, Miracle Whip).

As detailed in the April 2012 Sugar and Sweetener Outlook, there have been recent large differences between estimates of U.S. HFCS going to Mexico. Estimates provided by Mexico’s Secretariat of the Economy (Economia) and used by CNDSCA in estimating Mexican sweetener consumption are higher than U.S. exports to Mexico reported by the U.S. Census Bureau. The Economia total for FY 2010 was 4.4 percent higher and 14.1 percent higher in FY 2011. For the first 6 months of FY 2012, Economia reports HFCS imports from the United States at 576,173 mt, dry basis, while the U.S. Census Bureau reports exports to Mexico only at 410,269 mt, dry basis. The difference is a very high 40.4 percent.

Figure 7 shows the implications of the differing estimates for measuring U.S. HFCS production. If U.S. export data is used, FY 2012 production for the first half of the year is estimated at 4.136 million tons, dry basis. This is 3.7 percent less than what was produced during the corresponding period in FY 2011 and 0.8 percent less than in FY 2010. Using the Mexico import data as the measure of U.S. HFCS in Mexico implies 6-month FY 2012 production at 4.321 million tons, dry basis. This would be about the same level last year and 4.0 percent higher than in FY 2010. FY 2012 production through March (6-months) using the Mexican data is 4.5 percent higher than implied by use of the U.S. Census Bureau export data.