SUGAR AND SWEETENERS OUTLOOK -- SUMMARY January 24, 2003 January 2003, ERS-SSS-236s 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 report will be available electronically about 1 week following this summary release. ----------------------------------------------------------------- USDA Increases Sugar Marketing Allotments Under authority granted in the Farm Security and Rural Investment Act of 2002, the U.S. Department of Agriculture (USDA) announced on January 10, 2003, that it was immediately raising the Overall Allotment Quantity (OAQ) for sugar marketing allotments by 500,000 short tons, raw value (STRV), to 8.2 million STRV. The resulting sector allocations for the 2002-crop are: O Beet sugar: 4.457 million STRV O Cane sugar: 3.743 million STRV Total: 8.200 million STRV The OAQ of sugar for a crop year is determined by subtracting the sum of 1.532 million STRV and carry-in stocks of sugar (including inventory owned by the Commodity Credit Corporation) from the USDA’s estimate of sugar consumption and reasonable carryover stocks at the end of the crop year. The OAQ is divided between refined beet sugar at 54.35 percent of the overall quantity and raw cane sugar at 45.65 percent of the overall quantity. According to the formula, the USDA added the sugar consumption estimate of 9.6 million STRV reported in USDA’s January 10, 2003, World Agricultural Supply and Demand Estimates (WASDE) report and reasonable carry-out of 1.41 million STRV (14.5 percent of total use of 9.725 million STRV). Subtracted from this total was the estimated carry-in of 1.276 million STRV and the statutory 1.532 million STRV. Not counted in the calculation was an estimated 200,000 STRV of raw sugar that was likely shipped in fiscal year (FY) 2002 to entities not required to report their sugar stocks to the USDA. The USDA projects sugar production for FY 2003 at 8.155 million STRV, an increase of 249,000 over the previous year. Cane sugar production for FY 2003 is projected at 3.94 million STRV, down 52,000 STRV from the previous year. Although production is projected to increase in Florida and Hawaii and stay about the same in Texas, these increases are more than offset by a projected production decrease in Louisiana of 247,000 STRV. FY 2003, beet sugar production is projected at 4.215 million STRV, up 301,000 STRV from the previous year’s total that was reduced by USDA’s Payment-in-Kind (PIK) Diversion program. The USDA established the FY 2003 tariff-rate quota (TRQ) for imports of raw cane sugar into the United States at 1,117,195 metric tons, raw value (MTRV), or 1,231,497 STRV. This amount represents the level to which the United States is committed under the Uruguay Round Agreement. No allocation for Mexico under the terms of the North American Free Trade Agreement (NAFTA) has been announced. The USDA established the FY 2003 refined sugar TRQ at 37,000 MTRV, or 40,786 STRV. The refined sugar TRQ exceeds the minimum level of 22,000 MTRV to which the United States is committed under the Uruguay Round Agreement. As of January 3, 2003, raw sugar TRQ imports have totaled 223,324 MTRV. This amount is 20 percent of the total, and exceeds entries from the previous year for the same time period by nearly 37,000 MTRV. The USDA projects other program sugar imports outside the sugar TRQ for FY 2003 at 300,000 STRV. Other USDA import programs include the Refined Sugar Re-export Program, the Sugar-Containing Products Program, and the Polyhydric Alcohol Program. Non-program imports for FY 2003 are projected at 60,000 STRV. The USDA projects deliveries for domestic food and beverage use for FY 2003 at 9.6 million STRV. Before the November 2002 WASDE, the projection had been 9.8 million STRV. The projection was reduced after delivery data for September 2002 strongly indicated that sugar processors and refiners had increased deliveries above underlying demand requirements in order to reduce reported stocks before marketing allotments were put in place on October 1. The USDA projects sugar exports at 125,000 STRV. These exports occur under the Refined Sugar Re-export Program. The USDA also projects that deliveries made to domestic food and beverage manufacturers under the Sugar-Containing Products Re-export Program will total 170,000 STRV. The USDA projects FY 2003 ending stocks at 1.311 million STRV, implying an ending stocks-to-use ratio of 13.48 percent. On January 10, 2003, the USDA announced that it would immediately offer for sale its refined sugar inventory of 24,000 STRV, and also its remaining raw sugar inventory of 160,901 STRV. These actions will complete the disposition of over one million tons of sugar that USDA acquired during FY 2000 and 2001.