SUGAR AND SWEETENERS OUTLOOK -- SUMMARY January 23, 2007 January 2007, ERS-SSS-248 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. ----------------------------------------------------------------------------- Beet Sugar Production Forecast at Record Level Fiscal year (FY) 2007 beet sugar production is projected at a record 5.078 million short tons, raw value (STRV). This projection level exceeds the previous record set in FY 2000 by over 100,000 STRV. Expected production gains since July have been concentrated in the Red River Valley region of Minnesota and North Dakota and in Idaho. Only in the central Great Plains (Nebraska, Colorado, and southeast Wyoming) have production prospects been downgraded from earlier levels. Cane sugar production is projected at 3.536 million STRV, an improvement over last year’s disappointing total of 2.956 million STRV, but still short of the 2000-04 average of 4.014 million STRV. Overall FY 2007 sugar production is forecast at 8.615 million STRV. (This total is well short of the record in FY 2000 of 9.050 million STRV.) Imports are projected at 2.103 million STRV. Total imports are made up of tariff-rate quota (TRQ) imports, 1.718 million STRV (shortfall of 175,000 STRV); other USDA program imports, 325,000 STRV; and high-tier tariff and syrup imports, 60,000 STRV. Deliveries for domestic food and beverage use are projected at 10.25 million STRV; other deliveries are 165,000 STRV; and exports are 200,000 STRV. Ending stocks (i.e., the difference between total supply and use) are projected at 1.800 million STRV, implying a high ending fiscal year stocks-to-use ratio of 17.0 percent. The New York No.14 nearby raw sugar futures price averaged 19.59 cents/pound (lb) in December and 19.96 cents/lb through the first 18 days of January 2007. The minimum price to avoid forfeiture is calculated to be 20.71 cents/lb in Florida, the largest cane-sugar-producing State. The Midwest beet sugar spot price from the Milling and Baking News averaged 26.10 cents/lb in December and 25.50 cents/lb through the first 2 weeks of January. While this price is still above minimum beet sugar prices to avoid forfeiture, plentiful supplies of refined sugar may continue to press the market downward for some months. Beet sugar processors report FY 2006 production at 4.444 million STRV, down 3.6 percent from last year. Cane sugar mills report final FY 2006 production at 2.956 million STRV, the lowest level since FY 1982. Hurricane damage in both Louisiana and Florida in fall 2005 resulted in low production in those States. The sum of beet and cane production is 7.399 million. Imports entering during FY 2006 are estimated by the Foreign Agricultural Service (FAS) at 3.443 million STRV, the largest level since FY 1984. The USDA had increased the sugar TRQ four times after the initial level had been set in the beginning of August 2005. These increases were made in response to the damage to sugarcane crops in Louisiana and Florida and to disruptions to sugar refining at the two refineries in Louisiana. (The Chalmette plant was closed until early December and was subject to reduced deliveries for several months after reopening.) Total TRQ entries are estimated at 2.588 million STRV. Due to problems in getting Certificates for Quota Eligibility (CQEs) to exporters in Mexico, much of the sugar from Mexico entered paying the high-tier tariff (3.02 cents/lb for raw sugar and 3.20 cents/lb for refined in 2006). This amount plus some other small imports from other countries is estimated at 450,000 STRV. Remaining imports entered for USDA’s re-export and polyhydric alcohol programs (349,000 STRV) and as sugar syrups (thick juice and molasses) equivalent to 56,000 STRV of sugar. FY 2006 sugar deliveries for domestic food and beverage are estimated at 10.184 million STRV. A large amount of these deliveries (596,300 STRV) were made up of direct-consumption refined sugar that went to entities that do not report to the USDA. Other deliveries (product re-export, polyhydric alcohol programs, and livestock feed) are estimated at 156,500 STRV, and ending year stocks held by processors and refiners are estimated at 1.698 million STRV. The ending year stocks-to-use ratio is calculated at 16.2 percent. The USDA projects 2006/07 Mexican production at 5.650 million MTRV. This projection assumes about the same area harvested as last year and normal weather conditions. Harvesting progress has lagged considerably behind past seasons. Through January 13, 2007, only 911,050 metric tons of sugar has been produced from 9,454,172 metric tons of harvested sugarcane. Recovery is calculated at 9.64 percent, considerably below recent harvest seasons. Mexican sugar exports for 2006/07 are forecast at 230,000 MTRV, down 90,000 MTRV from the November 2006 forecast. The decrease is attributable to lower returns in the U.S. market compared with corresponding domestic returns. Mexican refined sugar prices are above the U.S refined beet sugar spot price—35.5 cents/lb for refinado (Mexico City) compared with 26.1 cents/lb (U.S. Midwest) in December. Also, the December average price for estandar sugar was 31.29 cents/lb (Mexico City) compared with the nearby New York No.14 futures price for raw sugar in December at 19.59 cents/lb. Mexican sugar consumption for 2006/07 is forecast at 5.2 million MTRV, the same as last year. Consumption of high fructose corn syrup is expected to increase 100,000 metric tons (mt), dry weight from 650,000 mt in 2005/06 to 750,000 mt in 2006/07. END_OF_FILE