SUGAR AND SWEETENERS OUTLOOK -- SUMMARY May 23, 2006 May 2006, ERS-SSS-246 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. ----------------------------------------------------------------- Sugar Production in FY 2007 to Increase 800,000 Tons The National Agricultural Statistics Service (NASS) published 2006 crop year sugarbeet acreage intentions for planted area at the end of March. Acreage intentions were about 6.0 percent higher than 2005 crop year area planted -- 1.372 million acres. Assuming a return to normal sucrose levels from last year's high levels and trend improvement in productivity, the U.S. Department of Agriculture (USDA) projects fiscal year (FY) 2007 national beet sugar production at 4.70 million short tons, raw value (STRV). This projection is about 317,000 STRV more than USDA's estimate of FY 2006 production (4.383 million STRV). The USDA projects cane sugar production at 3.53 million STRV. Florida sugar production is projected to recover from the extremely poor weather-related FY 2006 output to 1.80 million STRV, an increase of 430,000 STRV. A more modest recovery is projected for Louisiana at 1.30 million STRV, an increase of 55,000 STRV over last year's disappointing estimated results (1.245 million STRV). FY 2006 Texas cane sugar production is projected at 180,000 STRV and Hawaii cane sugar production is projected at 250,000 STRV. Although the raw and refined sugar tariff-rate quotas (TRQ) for FY 2007 have not yet been announced, the USDA projects them in the World Agricultural Supply and Estimates (WASDE) report at minimum levels implied by existing international commitments to the World Trade Organization (WTO), Central American and Dominican Republic Free Trade Agreement (CAFTA-DR), and the North American Free Trade Agreement (NAFTA). The projection in the May WASDE is, therefore, at 1.318 million STRV, assuming a shortfall of 50,000 STRV. Included in the total minimum access quantity is the refined sugar TRQ whose minimum access commitment is 24,251 STRV, or 22,000 metric tons, raw value (MTRV). Other program sugar imports outside the sugar TRQ for FY 2007 are projected to total 325,000 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 2007 are projected at 175,000 STRV. Included in this amount is sugar from imported syrups at 75,000 STRV, the same amount as for FY 2006, and high-tier tariff sugar imports at 100,000 STRV, down from the FY 2006 estimate of 250,000 STRV. Deliveries for domestic food and beverage use for FY 2007 are projected at 10.250 million STRV, an increase of 100,000 STRV over the FY 2006 delivery estimate. The projection for the Sugar-Containing Product Re-export deliveries is 125,000 STRV, an increase of 50,000 over the FY 2006 estimate. The FY 2007 projections for deliveries for the manufacture of polyhydric alcohol and feed uses are 20,000 STRV for each, the same as the FY 2006 estimates. Sugar deliveries for the first two quarters of FY 2006 are seemingly robust at 5.047 million STRV, 3.4 percent higher than the same two quarters in FY 2005. In spite of the strong delivery growth, the USDA estimates FY 2006 deliveries for human food and beverage use at 10.150 million STRV, which would represent growth of only 1.3 percent. This fiscal year has been different than previous years because of the high proportion of deliveries constituted by direct consumption imports. These imports have totaled about 361,000 from October 2005 through March 2006. Imports for March were a record at 142,000 STRV and were only known after the publication of the May 2006 WASDE. Ending stocks are the difference between supply and use. For FY 2007, ending stocks are projected at 869,323 STRV, implying an ending stocks-to-use ratio of 8.2 percent. Because FY 2007 TRQ imports were projected only at the commitment level required by the WTO, CAFTA-DR, and NAFTA, less projected shortfall, it is possible that ending stocks will be projected higher after the USDA announces the FY 2007 TRQ for sugar. For FY 2006, ending stocks are estimated at 1.436 million STRV, implying an ending stocks-to-use ratio of 13.76 percent. Although U.S. sugar prices continue to be higher than normal, there is a wide disparity in the various measures of those prices. In April 2006 the Midwest refined beet sugar spot price averaged 36.38 cents per pound, compared with 23.80 cents in April 2005, for a 52.9-percent increase. Other measures of refined prices do not show as much growth. The April 2006 refined beet sugar producer price index reported by the Bureau of Labor Statistics (BLS) is 27.7 percent higher than the same month last year, and the refined cane sugar price is 29.3 percent higher. Raw sugar prices are up only 10 percent over levels of a year ago, buoyed by high world raw sugar prices while limited by domestic refining capacity constraints. Consumer sugar prices have increased, but not nearly as much as wholesale refined prices. The U.S. retail price for refined sugar in April was estimated at 48.00 cents per pound by BLS. This is 10.1 percent higher than in April 2005. Consumer price indices of sugar- containing products show inconclusive effects of higher sugar prices.