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USDA Sugar and Sweeteners Outlook


17 April 2013

USDA Sugar and Sweeteners Outlook - April 2013USDA Sugar and Sweeteners Outlook - April 2013


USDA Sugar and Sweeteners Outlook

U.S. Sugar April 2013

On April 10, 2013, 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 Mexico and the United States for fiscal year (FY) 2013. The USDA projects Mexico sugar production at 6.117 million metric tons (mt), an increase of 227,000 mt from last month. The USDA projection of deliveries for human consumption is unchanged at 4.200 million mt. The USDA projects ending stocks at 27 percent of consumption, or 1.135 million mt. The USDA projects exports residually at 1.520 million mt. Based on reliable information, the USDA expects 110,000 mt to be exported to third countries outside of the North American Free Trade Agreement (NAFTA) area. Exports to the United States are projected at 1.410 million mt.

The USDA reduced its FY 2013 U.S. beet sugar forecast by 200,000 short tons, raw value (STRV) to 5.100 million STRV. The reduction was based on lower expected sugar production from the 2013/14 sugarbeet crop to be harvested prior to start of FY 2014. The USDA increased its forecast of Florida cane sugar production by 20,000 STRV to 1.850 million STRV based on processors’ reporting of better prospects. Total sugar production (beet sugar plus cane sugar) is forecast at 8.980 million STRV.

The USDA increased sugar imports by 58,000 STRV to 3.036 million STRV. All of the increase is attributable to increased imports from Mexico. Based on pace to date, the USDA increased its forecast of deliveries for human consumption by 100,000 STRV to 11.480 million STRV. The USDA projects total ending-year stocks 222,000 STRV lower than last month at 2.136 million STRV. The implied ending stocks-to-use ratio is 18.0 percent, 2 percentage points lower than last month.

Sugar and Sweeteners in the North American Free Trade Area

On April 10, 2013, 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 Mexico and the United States for fiscal year (FY) 2013. As reported last month, the Comite Nacional Para El Desarrollo Sustentable de la Caña de Azucar (Conadesuca) updated its estimate of the 2012/13 Mexico supply and use balance and has since released some details regarding its most recent sugar production forecast.

Mexico Sugar and High Fructose Corn Syrup

The USDA projects Mexico sugar production at 6.117 million metric tons (mt), an increase of 227,000 mt from last month. Although signs of a larger crop were evident in early March, the USDA continued to anchor its projection in the March 2013 WASDE on the underlying parameter values of Conadesuca’s existing official forecast. Immediately after the release of the March 2013 WASDE, Conadesuca released its new forecast of production at 6.247 million mt. Later in March, Conadesuca released a small portion of the supporting technical assumptions behind the forecast.

Table 1 shows technical detail of the USDA and Conadesuca forecasts. Although the April 2013 USDA forecast and the Conadesuca forecast are in rough agreement (Conadesuca is about 130,000 mt higher), underlying assumptions differ considerably. The USDA bases its forecast on interim data through March 30 and average historical relationships between parameter values through this date and final, end-of-season parameter values. The USDA allows for variability in parameter estimation and thus produces ranges within which there is strong statistical likelihood for those final values. In the past, Conadesuca has relied on factory surveys for its forecasts. In this latest forecast, it has not yet published its customary detailed factory forecasts.

The USDA projects area harvested at 702,000 hectares, while Conadesuca projects a record 768,000 hectares. Area harvested through April 6 has amounted to 509,718 hectares, running about 17,740 hectares behind the corresponding period averaged over the last 5 years. To reach the Conadesuca total, 258,175 hectares would have to be harvested by the end of June. This is about 100,000 hectares more than the average for the past 4 years. Although possible, achieving this would require a herculean effort. Conadesuca projects sugarcane yield at 71.4 mt per hectare and USDA projects the yield at 77.0 mt. The interim yield through April 6 is 84.5 mt per hectare. While the yield would be expected to decrease at the end of the harvest, the 15.5 percent decrease to 71.4 mt seems precipitous. Sucrose recovery is the most stable of the parameters–it is only here that both USDA and Conadesuca appear to agree.

Table 1 -- Mexico Sugar Crop Parameter Projections

Source: U.S.Dept. Agriculture, World Agricultural Supply and Demand Estimates; Economic Research Service, Sugar and Sweetener Outlook .

The largest difference between the series is for deliveries for human consumption. Originally, both USDA and Conadesuca were forecasting consumption at 4.20 million mt. Conadesuca increased its forecast to 4.40 million; the USDA made no adjustment. Table 3 shows sugar and high fructose corn syrup (HFCS) deliveries through the end of February. Both sugar and HFCS in 2012/13 are running behind the same period last year. Although Conadesuca reduced its HFCS forecast by 94,000 mt to 1.541 million mt, dry weight, the reduction in HFCS deliveries through February is less than 1-percent, while the corresponding sugar reduction is 2.6 percent.

The USDA and Conadesuca project ending stocks at 27 percent of consumption: 1.135 million mt for USDA and 1.189 million mt for Conadesuca. The USDA projects exports residually at 1.520 million mt—close to the Conadesuca projection of 1.527 million mt. Based on reliable information, the USDA expects 110,000 mt to be exported to third countries outside of the North American Free Trade Agreement (NAFTA) area. Exports to the United States are, therefore, projected at 1.410 million mt.

U.S. Sugar Supply and Use

The USDA reduced its FY 2013 beet sugar forecast by 200,000 short tons, raw value (STRV) to 5.100 million STRV. The reduction was based on lower expected sugar production from the 2013/14 sugarbeet crop to be harvested prior to October 1, 2013, the first day of the new fiscal year.

Sugarbeet area for 2013/14 from the National Agricultural Statistics Service (NASS) Prospective Plantings shows planted area at 1.211 million acres, only 19,000 acres less than last year. Plantings are expected to be lower in Minnesota and North Dakota by 1.0 percent, by 2.8 percent in the Great Plains, and by 3.9 percent in the Pacific Northwest. Area is projected to remain the same in Michigan and California. Cold and wet weather conditions in a large proportion of the sugarbeet growing areas are expected to cut into early plantings and subsequent early harvesting. There is no reason to expect anything but a return to normal yields from last year’s high levels. Although sugar production in 2013/14 could be in excess of 4.900 million STRV, the proportion of production gained from slicing in the August/September period would not be expected to be above average.

The USDA increased its forecast of Florida cane sugar production by 20,000 STRV to 1.850 million STRV based on processors’ reporting of better prospects. Total sugar production (beet sugar plus cane sugar) is forecast at 8.980 million STRV.

The USDA increased sugar imports by 58,000 STRV to 3.036 million STRV. All of the increase is attributable to sugar from Mexico. Although more imports from Mexico are expected, the pace of imports will have to pick up to reach the projected 1.647 million STRV. The Foreign Agricultural Service (FAS) estimates these imports through the end of March at 685,104 STRV, or 41.6 percent of the full-year forecast. Monthly imports will have to average a high level of 160,400 STRV for the next 6 months to reach the forecast.

The import increase is more than offset by the aggregate production decrease: total supply is 122,000 STRV lower than last month, now projected at 14.001 million STRV.

The USDA increased its forecast of deliveries for human consumption by 100,000 STRV to 11.480 million STRV. Although many observers believe that deliveries are not strong this year, deliveries from beet sugar processors are 7.0 percent higher through February compared with last year. The comparable rate for cane sugar processors/refiners is 1.3 percent, and for direct consumption imports it is 4.9 percent.

The first 5 months are actual deliveries. The rest-of-the-year deliveries are derived from the trends shown in the top panel. Total deliveries are shown at 11.496 million STRV, but the WASDE increase was rounded to an even 100,000 STRV. Direct consumption imports are implicitly projected at 1.129 million STRV in the WASDE accounting.

Total use increased 100,000 STRV in the WASDE. Along with the decrease in total supply, total ending-year stocks are projected 222,000 STRV lower than last month at 2.136 million STRV. The implied ending stocks-to-use ratio is 18.0 percent, 2 percentage points lower than last month.

Sugar Balances in Perspective

U.S. sugar supply and use by sourcing components as projected by the Sugar and Sweetener Outlook: beet sugar processors, cane sugar processors/refiners, and direct consumption imports. The division of ending stocks of 2.136 million STRV is projected as 1.220 million STRV held by beet sugar processors and 916,000 STRV by cane sugar processors/refiners.

Annual U.S. beet sugar supply and use balances since 1998/99 through the 2012/13 projection year. Table 7 gives the same information for cane sugar. Figure 1 shows historical ending stocks-to-use ratios for beet and cane sugar stocks. The projected 2012/13 beet sugar ratio at 25.8 percent is the highest valued ratio, far exceeding the 15.3 percent average for this historical series sample. The projected 2012/13 cane sugar ratio at 15.2 percent is lower than the 18.2 percent period average and less than the 19.3 percent ratio of 2011/12.

These data would seem to suggest that beet sugar is in more excess supply than cane sugar. Interestingly, the low range of the Midwest refined beet sugar price quote in Milling and Baking News the first week of April is 27 cents per pound, still above the minimum price-to-avoid forfeiture. The nearby Intercontinental Exchange No. 16 raw cane sugar futures price is averaging about 20.70 cents per pound, slightly below the minimum price-to-avoid forfeiture.

April 2013

Published by USDA Economic Research Service

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