SUGAR AND SWEETENERS--SUMMARY December 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 SITUATION AND OUTLOOK (SSSV21N4) will be available 2-3 working days following release of this summary. NOTICE TO CIDS USERS: This summary and full report will be the last issue of SUGAR AND SWEETENERS that will be available through CIDS. This and other ERS reports are available through the USDA Economics and Statistics System maintained by Cornell University's Albert R. Mann Library. You may access reports using one of the following methods: o World Wide Web: http://www.econ.ag.gov/, select PRODUCTS & SERVICES, then PERIODICALS. o Gopher client: usda.mannlib.cornell.edu, select REPORTS. o FTP: usda.mannlib.cornell.edu, log in as "anonymous" with your ID name or e-mail address as the password, then type "usda/reports." ------------------------------------------------------------------------------ World Sugar Stocks Grow, But Price Remains Above 10 Cents a Pound World sugar production for 1996/97 is forecast at 125.1 million metric tons and world sugar consumption at 123.0 million tons, for a surplus of 2.1 million tons. Over the 2 previous years, global stocks grew by over 6.0 million tons, and world spot market prices for raw sugar have been trending downward from a peak of 14.87 cents a pound reached in January 1995. The 1996/97 world sugar production forecast is up 3.7 million metric tons from September, and up 4.9 million tons from USDA's first estimate of the 1996/97 crop in May. Since the September report, improved 1996/97 production prospects are foreseen for a number of countries and regions, including India, the European Union, China, Brazil, Australia, and the United States. Countries with production now forecast lower than in September include South Africa, Zimbabwe, Pakistan, the Philippines, Russia, Colombia, and Argentina. Global sugar consumption for 1996/97 is up 4.4 million tons from the revised estimate for 1995/96, with no major changes from the September forecast. Asia is forecast to consume 42 million tons, up 25 percent since 1990/91 and accounting for over a third of global sugar use. In 1990/91, the former Soviet Union's share of world sugar consumption was 11 percent, but for 1996/97 it is forecast at 8 percent. The European Union once consumed considerably more sugar than South America, but by 1995/96 South America had jumped ahead. World sugar trade for 1996/97 is forecast at 35.5 million tons, or about 28 percent of forecast world sugar production. India's record 1995/96 crop and high carry-in stocks forced it to export in 1995/96, and though production will be down about 1.2 million tons, India is likely to export even more in 1996/97. Among the world's major sugar-importing countries, imports are expected to remain strong for Russia at 3.2 million tons, while China's imports will remain similar to last year's 2.5 million tons but down from about 3.5 million in 1994/95. In 1995/96, the United States' sugar imports rose significantly to 2.5 million tons, second in the world only to Russia. Currently projected 1996/97 U.S. imports of 2.7 million tons would maintain the United States in second place. World spot prices for raw sugar (f.o.b. Caribbean, Contract No. 11) averaged 11.28 cents a pound for the first 13 market days of December compared with 11.65 in October and 11.29 in November. The world price averaged 12.10 cents a pound in the October-December 1995 quarter. Although declining slowly over the last 2 years, world raw sugar prices remain relatively robust in the face of surpluses in the last two years and another year of surplus forecast. One reason for relatively strong prices is that India has kept much of its surplus stocks off the world market. The premium of the spot market over futures price has been declining over the last several months. Prospects for another large world sugar crop and higher global stocks are holding futures prices down. Brazil is a key factor not only because of prospects for a large crop, but the ability to switch sugarcane to ethanol or sugar. Ending 1996/97 stocks are forecast at 26.9 million tons, up 2.2 million tons from last year. The stocks-to-use ratio, at 21.9 percent, is up 1 percentage point from 20.9 percent last year. U.S. sugar production in fiscal 1996/97 (October 1996-September 1997) is projected at 7.3 million short tons, raw value, down 1.2 percent from 7.4 million tons in 1995/96. Beet sugar production is forecast at 4.0 million tons, raw value, representing 55 percent of total expected sugar production and up 84,000 tons from last year. The beet sugar production forecast is 100,000 tons above the September forecast due to better than expected autumn growing and harvesting conditions, and good storage conditions to date for sugarbeet piles. Beet acreage harvested is 1.32 million acres, 93,000 acres below last year and the lowest since 1989/90. Beet acreage was down this year in California, Ohio, Michigan, Idaho, and Texas, while States with higher acreage were Colorado, Minnesota, Montana, and North Dakota. In Michigan and Ohio especially, high prices for alternative crops such as corn, soybeans, and dry beans attracted farmers away from sugarbeets. Cane sugar production is forecast at 3.28 million tons, raw value, down 174,000 tons from last year, but up 130,000 tons from the September forecast. Florida's sugar production forecast is unchanged from September at 1.76 million tons raw value. Louisiana's sugar production is forecast at 1 million tons raw value, up from the September forecast of 870,000 tons. Damage from last winter's freeze may not be as bad as first thought, since it was generally the lowest-yielding fields which were abandoned. There were good growing conditions in the fall and yields are now expected to be above average, and Hawaii's 1996/97 forecast production of 390,000 tons takes mill closures into account. Texas has been experiencing a drought, and even though it has recently rained, irrigation is still restricted for many sugarcane farmers. The Texas sugar production forecast remains at 100,000 tons, raw value. Production in Puerto Rico is forecast at 30,000 tons. U.S. sugar consumption for fiscal 1996/97 is forecast at 9.90 million tons, up 3.6 percent or 347,000 tons from the revised forecast for 1995/96. Sugar deliveries in 1995/96 were less than had been anticipated because of short beet sugar supplies in August and September, the last 2 months of the fiscal year. The 1996/97 forecast assumes that shortfalls at the end of 1995/96 will be offset by higher deliveries in the October-December quarter. During most of 1996, prices for refined sugar were strong due to lower beet sugar output. As prospects for 1996/97 beet sugar output increased in recent months, spot market refined sugar prices appear to have softened somewhat. Combined with the refined sugar tariff rate import quota (TRQ), the fiscal 1996/97 total TRQ--including raw sugar, refined sugar and specialty sugars--is set at 2.322 million metric tons (2.556 million short tons). Under a revised administrative plan, only 1.7 million metric tons of the raw sugar quota was initially allocated in September. The decision about whether to allocate the remaining 600,000 tons will be made next year. As of December 1, 1996, about 10 percent of the initial raw sugar allocation of 1.7 million metric tons had been filled, and the USDA is forecasting a shortfall of 64,000 metric tons. U.S. sugar stocks at the end of fiscal 1996/97 (September 30, 1997) are forecast at 1.58 million short tons, up 5.7 percent from the revised estimate for 1995/96. Stocks reflect a projected total supply of 11.73 million tons and total use of 10.15 million. The fiscal 1996/97 stocks-to-use ratio is forecast at 15.6 percent, compared with 15.1 percent for this season. U.S. raw sugar prices (nearby futures, c.i.f. duty paid, Contract No. 14, New York) averaged 22.14 cents a pound for the first 13 market days of December, up from 22.37 cents in October and 22.12 cents in November. Refined beet sugar list prices in the October-December quarter are around 29 cents a pound, above the 27.5 cents in October-December 1995. Spot prices are reported below 29 cents. High fructose corn syrup (HFCS) production in 1996/97 is forecast at 8.41 million short tons, dry basis, up 3.7 percent from 1995/96 and accounting for about 67 percent of expected total corn sweetener production. Wet-milling capacity continues to expand, and a new company is beginning to produce and sell HFCS in December 1996. The HFCS-55 list price for fiscal 1996 was 20.56 cents a pound, dry basis, up from 18.81 cents the year before, but down from 22.87 cent in fiscal 1994. The HFCS-42 list price averaged 18.49 cents a pound dry basis in fiscal 1996, compared with 16.82 cents in fiscal 1995 and 20.59 in fiscal 1994. This issue contains a special article "The Central American Sugar Industry." Printed copies of the SUGAR AND SWEETENER SITUATION AND OUTLOOK will be available in about a week. To subscribe to the printed version of this report, call 1-800-999-6779. For further information contact Ron Lord (202) 219-0888, rlord@econ.ag.gov. END_OF_FILE