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USDA Sugar and Sweeteners Outlook


16 December 2013

USDA Sugar and Sweeteners Outlook - December 2013USDA Sugar and Sweeteners Outlook - December 2013


USDA Sugar and Sweeteners Outlook

          

 

On November 21, 2013, the Foreign Agricultural Service (FAS) of the U.S. Department of Agriculture (USDA) released its latest estimates of world sugar supply and use for 2012/13 and its projections for 2013/14. World surplus production (the difference between total world production and total use) is estimated at a large 11.41 million metric tons, raw value (MTRV) for 2012/13 and projected lower--but still positive in--2013/14 at 6.35 million. Lower world prices in 2012/13 are accompanied by slightly lower production in 2013/14 (174.826 million MTRV, 0.7 percent lower than 2012/13) and greater consumption (168.476 million MTRV, 2.3 percent higher). World sugar stocks are estimated to have accumulated by over 7 million MTRV during 2012/13. Stocks-to-use ratios for 2012/13 and 2013/14 are both calculated to be above the average 24.6 percent since 2000/01. The combination of these two surplus measures (world production surplus and stocks-to-use) implies that world sugar prices should be lower than levels seen in recent years. Because the U.S. sugar sector has gained significant support from world prices until this past year, world sugar trends by themselves are not encouraging for domestic producers and processors or for the USDA that provides domestic price support to the industry.

On December 10, 2013, the 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 minor changes for 2012/13, based on small data revisions published in a revised Sweetener Market Data (SMD). For 2013/14, the USDA reduced imports from Mexico by 174,100 short tons, raw value (STRV) to 1.745 million STRV. The USDA made analytical updates to its methodology for forecasting deliveries for human consumption. The new forecast is 11.490 million STRV, a reduction of 110,000 STRV from last month. The USDA projects the sale of all sugar held by the Commodity Credit Corporation (CCC) for ethanol and other nonfood uses. Ending stocks are projected at 1.975 million STRV, implying a balanced ending stocks-touse ratio of 16.1 percent.

During the first week of December, Comite Nacional Para El Desarrollo Sustentable de la Caña de Azucar (Conadesuca) in Mexico released its first supply and use balance for 2013/14. The USDA adopted most, but not all, of the Conadesuca forecasts in the December 2013 WASDE. Total production is forecast at 6.695 million metric tons (mt), a decrease of 280,000 mt over last year but 195,000 mt higher than last month. The USDA adopted Conadesuca’s projections for sweetener consumption: 4.406 million mt for sugar and 1.491 million mt, dry weight, for high fructose corn syrup (HFCS). In contrast to Conadesuca’s assumption of tight sugar supplies at the end of 2013/14, the USDA expects the relative balance of ending stocks at 22 percent of forecast sugar consumption and exports of 2.622 million mt. The USDA adopts the Conadesuca forecast of 1.128 million mt to non-U.S. destinations. Implied exports to the United States are, therefore, 1.494 million mt, or 1.745 million STRV.

 World Sugar

s Production, Supply, and Distribution (PSD) database.1 Table 1 summarizes aggregate results for 2012/13 and 2013/14 marketing years and compares with FAS estimates and projections from May 2013. An appendix table shows results for important sugar producing and trading countries.

World surplus production (the difference between total world production and total use) is estimated at a large 11.41 million metric tons, raw value (MTRV) for 2012/13 and projected lower--but still positive--in 2013/14 at 6.35 million. Lower world prices in 2012/13 are accompanied by slightly lower production in 2013/14 (174.826 million MTRV, 0.7 percent lower than 2012/13) and greater consumption (168.476 million MTRV, 2.3 percent higher).

Figure 1 shows the year-over-year changes in the supply-use components. The largest component change is for beginning stocks of over 7 million MTRV, meaning that stock accumulation occurring in 2012/13 is the most notable event during these 2 marketing years. This event was not foreseen in the May 2013 estimates. Figure 2 shows the sources of the world sugar stocks accumulation. India and China are the main sources of increased stocks, both in tonnage and in terms of percentage change over stocks held at the beginning of 2012/13. Stocks accumulation is significant as well in the European Union and Thailand.

Figure 3 shows world sugar production, consumption, and ending stocks from 2000/01 through projected 2013/14. After 4 years of steady production growth, production levels off in 2013/14. The consumption series is less variable than production, but its year-over-year growth continues the stronger upward trek that started in 2010/11. World sugar stocks (measured off the right axis) show their strong recovery from the low of 2009/10.

 

 

 

 

Published by USDA Economic Research Service

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