SUGAR AND SWEETENERS--SUMMARY March 19, 1996 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. The complete text of SUGAR AND SWEETENERS is available 2-3 working days following release of this summary. ----------------------------------------------------------------------------- Sugar Consumption Robust World sugar production and consumption for 1995/96 are forecast at 119 and 118.1 million metric tons, raw value, respectively. The implied surplus has shrunk from December's estimate of 1.3 million to about 900,000 tons. The apparent recovery in consumption is supporting prices, which have remained relatively firm despite the big increase in production. World sugar consumption is estimated at a record 118.1 million tons, 1.5 million higher than December. Countries in which consumption is forecast up strongly from last year include the Russian Federation, Brazil, China, the United States, the Philippines, and Indonesia. World consumption is forecast to rise a robust 3.5 percent, compared with an average of only 1 percent for the previous 5 years. The rapid declines in sugar consumption associated with the economic downturns in the countries of the former Soviet Union and Central Europe appear to have ceased, and sugar consumption in most of those countries has either stabilized or is starting to rise. The world sugar production estimate is up 2.7 percent over last year and tops the previous record of 116.5 million tons in 1991/92. The estimate is up 1 million tons from December, of which 600,000 tons are from Brazil. Other countries with higher production forecasts since December include China, up 400,000; India, 350,000; Thailand, 200,000; Russian Federation, 150,000; Mexico and Argentina, 90,000 each; and Australia, 67,000 tons. Forecasts have been lowered since December for Pakistan, down 320,000 tons; the Philippines and Ukraine, 200,000 each; the European Union (EU), 150,000; and Turkey and Indonesia, 100,000 each. Over the last 5 years, world production has grown an average 1 percent a year. The forecast world ending stocks-to-use ratio is 17.7 percent, up only marginally from 17.6 percent for 1994/95. The forecast is well below the 1992/93 stocks-to-use ratio of 20.7 percent, a time when the world raw sugar price averaged below 10 cents a pound. The world spot sugar price has averaged 12.2 cents a pound between September and February of the current season. U.S. sugar production for fiscal 1995/96 (October-September) is forecast at 7.5 million short tons, raw value, down 5.4 percent from the record production of 1994/95. U.S. sugarbeet production is forecast at 29.5 million tons, down about 8 percent from the year before. Sugarbeet area harvested is forecast at 1.42 million acres, down 1.2 percent. Sugarbeet yield is forecast at 19.7 tons per acre, down from December's estimated 20.3 tons and last year's 22.2 tons. The recovery rate of beet sugar from sugarbeets is low this year due in part to lower quality sugarbeets, but also poor weather in the fall harvest and winter grinding season, which causes deterioration of beets stored in piles. Beet sugar production is forecast at 4 million tons, raw value, down 100,000 tons from December and almost 500,000 tons (11 percent) lower than last year. U.S. cane sugar production is forecast at 3.5 million tons, up 110,000 tons from the December forecast and about 70,000 tons higher than last year. The estimate for Florida was recently raised to 1.8 million tons because of better-than-average weather during the harvest season which runs until late March. Florida's acreage harvested for sugar is up 4,000 acres from last year at 427,000 acres, and sugarcane yield was up slightly to 34 net tons per acre. Louisiana produced another record crop of 1.06 million tons, 40,000 tons higher than last year's record 1.02 million and up 80,000 tons from December's estimate. Acreage harvested in Louisiana jumped 16,000 acres (2 percent) from a year ago to a record 368,000 acres, and yield was marginally higher at 25.4 net tons per acre. Texas is forecast to produce 140,000 tons, the same as December's estimate and down slightly from last year's record 147,000 tons. The U.S. sugar consumption forecast is 9.52 million tons, up 100,000 from December's estimate and up 180,000 tons from last year. This would represent an increase in consumption of 2 percent. Last year consumption was flat, but the trend rate of growth over the last 5 years has been about 1.6 percent. Deliveries in October-January of this year have been very strong, but may have been boosted by the desire of users to obtain quantities ahead of announced price increases. U.S. raw cane sugar prices averaged 22.68 cents a pound in February (Contract No. 14, nearby futures). The prices for July and September 1996 futures have been above 23 cents a pound since early February 1996. The quarterly average raw sugar price was above year-earlier levels for all 4 quarters of calendar 1995, and the calendar year average price of 22.96 cents was almost 1 cent higher than 1994. As the prospective size of the current beet sugar crop has fallen progressively since last summer, users have turned to cane refiners, tightening the cane sugar market. The tariff-rate import quota (TRQ) for raw cane sugar was increased in November 1995 and January 1996, by a combined 772,000 short tons. The TRQ for refined sugars unchanged at 24,251 tons. U. S. refined sugar prices have risen in recent months. The wholesale beet sugar price (Midwest markets, fob factory) averaged 29 cents a pound in February--up 3.5 cents from February 1995-- and 29.50 cents for the first 2 weeks of March. The last time refined beet sugar prices were above 29 cents was 1990, when the annual average was 29.97 cents a pound. When there is a large beet crop, refined sugar prices can be pressured by supplies which exceed storage capacity, but this year's reduced beet sugar crop has resulted in a situation in which some beet processors are having difficulty meeting sales commitments and are filling in with refined cane sugar. Additional nearby uncertainty about U.S. sugar supplies comes from the import side. There are some countries, allocated a share of the U.S.TRQ, whose surplus are insufficient to fill their allocations. Usually, these countries fill their U.S. allocations and import from the world market for some of their domestic needs. Last year, the United States suspended and reallocated some of the TRQ from countries that could not fill their allocations to other countries with sufficient supplies. U.S. corn sweetener production in fiscal 1995/96 (October/September) is forecast to total 12.2 million tons, dry basis, up 3.9 percent. This forecast reflects expanded industry capacity and recent growth trends. High fructose corn syrup (HFCS) production is forecast at 8.15 million tons, dry basis, up 4.3 percent from 1994/95 and accounting for two-thirds of expected total corn sweetener production for this year. For fiscal 1994/95, HFCS production totaled 7.8 million tons, up 4.8 percent from the corresponding period in 1993/94. Glucose syrup and dextrose are the other primary corn sweeteners produced by the U.S. corn wet milling industry. Combined glucose and dextrose production for fiscal 1995/96 is forecast at 4.0 million tons. This is up 125,000 tons from the fiscal 1994/95 estimate and accounts for about a third of total expected corn sweetener production during fiscal 1995/96. USDA's 1995/96 (September/August) U.S. corn crop is forecast down 27 percent from the 1994/95 record of 10.10 billion bushels due to reduced acres harvested and lower yields reflecting weather problems in several States. The tight supply has resulted in strong corn prices. The U.S. corn-wet milling industry is expected to use over 700 million bushels of corn to produce corn sweeteners (HFCS, crystalline fructose, glucose syrup, and dextrose) this season. This represents almost 10 percent of the corn crop currently forecast at 7.37 billion bushels. This issue of the Sugar and Sweetener Situation and Outlook report also contains two special articles entitled "Great Lakes Beet Sugar Industry: Recent Developments and Future Prospects," and "U.S. Sugarbeet Farm Characteristics and Production Costs, 1992." Printed copies of the report should be available in about 1 week. For further information, contact Ron Lord (202) 219-1269. Text of the full report will also be available electronically. For details, call (202) 219-0515. END-END-END