SUGAR AND SWEETENERS OUTLOOK -- SUMMARY       January 22, 2004
January 2004, ERS-SSS-239

               Approved by the World Agricultural Outlook Board
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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.
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Central America Free Trade Agreement To Raise Imports From 
Central American Sugar Producers

On December 17, 2003, the U.S. Trade Representative, Robert 
Zoellick, announced that a free trade agreement (FTA) had been 
reached with El Salvador, Guatemala, Honduras, and Nicaragua. The 
Central American Free Trade Agreement (CAFTA) provides for 
additional combined sugar and sugar-containing product tariff-
rate quotas (TRQ) which total 85,000-90,000 metric tons in the 
first year. These TRQs are in addition to the four countries' 
currently combined World Trade Organization (WTO) access, which 
is 110,569 metric tons this year. The CAFTA quota will grow at an 
aggregate rate of about 2 percent a year. High-tier sugar tariffs 
will not be reduced over the term of the agreement.

On August 13, 2003, the U.S. Department of Agriculture (USDA) set 
the Overall Allotment Quantity (OAQ) for fiscal year (FY) 2004 
for sugar marketing allotments at 8,550,000 short tons, raw value 
(STRV). The USDA did not announce company allocations until 
September 30, at which time the Department announced that it was 
going to allocate only 96.5 percent of the OAQ, for a total of 
8.250 million STRV. When USDA made its decision in September, the 
raw cane sugar price averaged 21.34 cents a pound for September, 
and the refined beet sugar price averaged 24.00 cents a pound. 
Since then, both sugar prices have decreased to or close to 
calculated minimum prices to avoid forfeiture of sugar loans to 
the Commodity Credit Corporation (CCC). As of January 22, 2004, 
(the release date of the summary of this report) the USDA had 
made no further announcements of changes to the OAQ.

On January 12, 2004, the USDA released its latest supply and use 
estimates for FY 2003 and projections for FY 2004 in the World 
Agricultural Supply and Demand Estimates (WASDE) report. Sugar 
processors and millers project FY 2004 sugar production at 8.948 
million STRV. It is comprised of 4.852 million STRV of beet sugar 
and 4.096 million of raw cane sugar. Processors and millers 
estimate FY 2003 sugar production at 8.380 million STRV, 
comprised of 4.415 million STRV of beet sugar and 3.965 million 
STRV of raw cane sugar. 

On August 13, 2003, the USDA established the FY 2004 TRQ for 
sugar imports into the United States: 1,117,195 MTRV (1,231,497 
STRV) for raw sugar; and 39,000 metric tons, raw value (MTRV) 
(42,990 STRV) for refined sugar. Total shortfall (or the amount 
of allocated TRQ not expected to be imported) is projected at 
50,000 STRV.

As of January 6, 2004, raw sugar FY 2004 TRQ imports have totaled 
260,030 MTRV. This amount is 23.3 percent of the total allocation 
of 1.117 million MTRV. Refined sugar FY 2004 TRQ imports have 
totaled 9,412 MTRV, or 24.1 percent of the refined sugar 
allocation. To date, only 366 MTRV of TRQ sugar from Mexico has 
entered into the United States.

Other FY 2004 program sugar imports (the Refined Sugar Re-export 
Program, the Sugar-Containing Products Program, and the 
Polyhydric Alcohol Program) are projected to total 325,000 STRV. 
Non-program imports for FY 2004 are estimated at 35,000 STRV. The 
USDA projects FY 2004 exports at 160,000 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 200,000 STRV in FY 2004. 

Starting with the November 2003 WASDE, the USDA now 
estimates/projects fiscal year sugar sales instead of deliveries 
for domestic food and beverage use. The USDA projects FY 2004 
sugar sales at 9.450 million STRV, an amount deemed compatible 
with the current OAQ level.