Sugar Producer

May 2010 Sugar Producer

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USDA Sugar and Sweeteners Outlook IN THE MARCH 2010 WORLD Agriculture Supply and Demand Estimates (WASDE), the U.S. Department of Agriculture (USDA) projected increased sugar supply in Mexico for fiscal year (FY) 2010 of 50,000 metric tons, raw value (MTRV) from last month. Imports are increased by 250,000 MTRV based on the import quota announced by Mexico in February. Production, however, is projected to drop 200,000 MTRV to 4.900 million MTRV, based on continued reports of weather-reduced sugar yields. On the use side, sugar deliveries for human use are reduced 300,000 MTRV to 4.500 million MTRV to account for increased substitu- tion by corn-based sweeteners. U.S. exports of high fructose corn syrup (HFCS) to Mexico for October-December 2009 increased 142 percent from a year earlier to 209,000 metric tons (mt), dry basis. The USDA projects total HFCS consump- tion at 1.200 million mt, dry basis. Mexico’s ending stocks of sugar are projected at 868,000 MTRV, implying an ending-year stocks-to-consumption ratio at 18.9 percent. Mexico sugar exports are projected un- changed from February at 490,000 MTRV. For the United States, the USDA projected decreased sugar supply of 30,000 short tons, raw value (STRV), from last month, due to lower cane sugar production for Texas. On the use side, deliveries of sugar are reduced 50,000 STRV to food manufactur- ers under the Sugar-Containing Re-Export Program and to polyhydric alcohol produc- ers and feed end users, based on pace to date. MEXICO SUGAR The USDA projects Mexican sugar ex- ports unchanged at 490,000 MTRV. With no impending TRQ announcement from the USDA to date, the U.S. sugar-using sector may be examining accessing sugar either from Mexico or through high-tier tariff imports. At this point, increased Mexican sugar imports and less domestic demand coun- ters the reduction in production. With no further adjustment, ending-year stocks are projected at 868,000 MTRV, im- plying a higher ending-year stocks-to-con- sumption ratio of 18.9 percent compared with 9.6 percent last year. Higher U.S. prices should sustain ex- ports from Mexico to the United States. GLOBAL SUGAR OUTLOOK Global supplies for sugar continue to be tight, as reflected by high prices in the 2009/10 marketing year (October through September), although they have come off sharply from last month’s highs. February world raw sugar futures (#11, Inter-Continental Exchange (ICE)) prices were nearly twice as high compared with 2008/09, year-over-year. However, the increased production and exports of sugar in Brazil, coupled with a strengthening U.S. dollar since the begin- ning of February has helped alleviate the upward trend in world raw sugar prices. As of March 9, the #11 nearby futures price (currently for May 2010) for raw sugar at the ICE has fallen 28 percent since the beginning of February. The recent decline in world prices may have an effect on U.S. markets. Through mid March, U.S. raw sugar prices have not fallen as steeply as world prices, and re- fined beet sugar prices (Milling and Baking News Midwest quote) have not fallen at all. Figures 2 and 3 show calculated landed prices of high-tier tariff raw and refined sugar, respectively, and domestic U.S. prices. In both instances (but especially for refined sugar), world price movements show the incentive for importing sugar at the high-tier tariff or, at least, for more downward pressure on domestic prices. Lower production in major producing areas, particularly India, have caused tight supplies leading to increased prices and dramatic changes in global trade flows. Production in India has been substan- tially lower in the past 2 marketing years. Typical cyclical production patterns in India have been particularly exaggerated over the past few years. With stocks also low, India has become a significant net importer of sugar this year, more than dou- bling imports from last year to 6 million tons projection this year. India was a signif- icant net exporter as recently as 2007/08, exporting 5.8 million tons of sugar. India is importing primarily from Brazil to satisfy domestic demand. Brazil has ex- 23 ported more than six times more sugar to India from October 2009 through January 2010, compared with the same period last year, according to Brazilian customs data. With about 20 percent of Brazilian exports going to India through January, compared with only 4 percent last market- ing year, increased production and exports from other major exporters, particularly Australia and Indonesia, will be necessary to meet global demand. Current global estimates of 2009/10 production and exports are adequate to continue the trend of declining sugar prices. However, any supply disruptions or ad- ditional shocks could result in a return to very high sugar prices. DATA Tables from the Sugar and Sweeten- ers Yearbook are available in the Sugar and Sweeteners Briefing Room at http:// They contain the latest data and histori- cal information on the production, use, prices, imports, and exports of sugar and sweeteners. RELATED WEBSITES Sugar and Sweeteners Outlook http:// WASDE http://usda.mannlib.cornell. edu/MannUsda/viewDocumentInfo. do?documented=1194 Sugar Briefing Room, http://www.ers. n Editor’s Note: to read the full USDA Sugar & Sweeteners Outlook go to the Sugar Producer website at

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