SUGAR AND SWEETENERS -- SUMMARY January 25, 2001 January 2001, ERS-SSS-230 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The complete text of the report will be available electronically about 1 week following this summary release. ----------------------------------------------------------------------------- Payment-In-Kind (Pik) Diversion Program Reduces Fiscal Year 2001 Sugar Production The U.S. Department of Agriculture (USDA) reported the impact of the PIK Diversion program on fiscal year (FY) 2001 sugarbeet and beet sugar production in the October 2000 Crop Production report and the October World Agricultural Supply and Demand Estimates (WASDE) report. Sugarbeet area harvested fell by 101,600 acres, or about 7 percent from the September 1 forecast; and sugarbeet production dropped by 2.030 million tons, or about 6 percent lower than its September 1 forecast. National yield was forecast upward by 0.2 ton per acre. The production of beet sugar was reduced by 320,000 short tons, raw value (STRV), or by 6.9 percent from the September WASDE. Total sugar production in FY 2001 is presently projected at 8.538 million short tons, raw value (STRV), down 130,000 tons from the December projection, and 6 percent lower than the FY 2001 estimate. Beet sugar production for FY 2001 is currently projected at 4.370 million STRV. Sugarbeet production is forecast at 32.521 million tons, about 3 percent lower than last year. Area harvested is estimated at 1.378 million acres. The yield estimate is 23.6 tons per acre, a record. Based on historical relationships, it is projected that beets sliced during the current crop year will exceed 30.4 million tons, or about 3.7 percent less than last year. Based on to-date sugar recovery rates and their average relationship with respect to the final sugar recovery rate, it is projected that the final recovery rate, net of sugar from molasses, will equal 270 pounds per sliced ton, down 24 pounds from last year. This rate, along with a projection for sugar recovered from molasses, implies sugar production for FY 2001 of 4.37 million STRV, or about 12 percent less than last year. Cane sugar production for FY 2001 is projected at 4.168 million STRV, about 2.5 percent above the estimated total for FY 2000. Production increases in Florida (154,000 STRV), Texas (75,000 STRV), and Puerto Rico (19,000 STRV) are expected to more than offset declines in Louisiana (92,000 STRV) and Hawaii (53,000 STRV). Florida cane sugar production is projected at 2.130 million STRV. NASS estimates sugarcane production at 664,000 tons more than last year. Sugar recovery to date has been at a record high, implying that the season-average recovery rate will likely approach 13.2 percent. Texas cane sugar production is projected at 180,000 STRV. NASS estimates Texas area of sugarcane for sugar and seed at 46,600 acres, up 15,600 acres from last year. Yield is estimated at 37.7 tons per acre and the crop is estimated at 1.734 million STRV. Puerto Rico sugar production for FY 2001 is projected at 22,500 STRV. It is expected that the two sugar mills on the island will be back in production this year. Louisiana cane sugar production is projected at 1.570 million STRV. Although sugarcane area harvested has increased 35,000 acres over last year, sugarcane production is estimated down 275,000 STRV due to a continuing lack of adequate moisture. Sugar recovery is expected to be 5 percent lower than last year. Hawaii cane sugar production for FY 2001 is projected at 265,000 STRV. One of the three remaining Hawaiian sugar companies ceased operations in November 2000, and one of the other companies closed a processing facility. Sugar imports under the raw and refined sugar tariff-rate quotas (TRQs) are currently projected at 1.275 million STRV. As of January 8, 2001, sugar imports under the TRQs have amounted to 317,703 STRV, or about 25 percent of the amount projected to enter for FY 2001. Sugar imports outside the sugar TRQ for FY 2001 are projected to total 515,000 STRV, including 365,000 STRV under the combined Refined Sugar Re-export Program, the Sugar- Containing Products Program, and the Polyhydric Alcohol Program. The USDA projects an increase in U.S. sugar supply to 125,000 STRV as a result of sugar syrup imports under HTS 17029040. High- tier tariff sugar imports for FY 2001 are projected to increase to 25,000 STRV, up from 6,000 STRV in FY 2000. Sugar exports under the Refined Sugar Re-export Program for FY 2001 are projected at 175,000 STRV. Deliveries to domestic food and other products manufacturers under the Sugar-Containing Products Re-export Program are projected at 125,000 STRV. Deliveries for the Polyhydric Alcohol Program are projected at 15,000 STRV. Total deliveries for FY 2001 are projected at 10.385 million STRV. After netting out deliveries made for the Sugar-Containing Products and Polyhydric Alcohol Programs, along with deliveries for livestock feeding (20,000 STRV), domestic food and beverage deliveries are projected at 10.225 million, about 2.3 percent higher than FY 2000. Ending stocks are currently projected at 1.987 million STRV, for an ending stocks-to-use ratio of 18.8 percent. Of the total, the Commodity Credit Corporation (CCC) owns 793,555 STRV or 39.9 percent of total projected ending stocks. The ratio of privately- held ending stocks-to-use is projected at 12.5 percent. The CCC acquired 793,669 STRV in October as a result of loan forfeitures Adding this amount to what the CCC had already owned (296,649 STRV) gave them a pre-PIK Diversion dispersal total of 1,090,318 STRV. On December 1, 2000, the CCC transferred title to 277,349 tons of refined crystalline sugar to participating producers, or their assignees. The acres diverted from production by the PIK Program represent about 7 percent of acreage planted to sugar beets. Domestic deliveries of HFCS-42 in 2000 are forecast at 3.562 million tons, dry basis, about the same level as last year. Domestic deliveries of HFCS-55 are forecast at 5.603 million tons, dry basis, about 30,000 tons less than last year. These levels represent a major downturn for the industry. If current trends continue, it is likely that total HFCS deliveries for 2001 will be only 1.1 percent higher than levels in 2000. Prospects for HFCS-42 are for little to no growth, while HFCS-55 deliveries may grow as much as 1.7 percent. Much will depend on developments in the soft drink industry where sales growth diminished from the high levels from most of the 1990's. Printed copies of the Sugar and Sweeteners Situation and Outlook report will be available in about 2 weeks. This issue will contain a special article U.S. Sugar Price Indices and Stocks- to-Use Ratios: Accounting for a Volatile Fiscal Year 2000. For more information, contact Stephen Haley 202-694-5247 or shaley@ers.usda.com. The text of the report will also be available electronically via the ERS website at www.ers.usda.gov. END_OF_FILE