20140116-USDA-Sugar_and_Sweeteners_Outlook_14页_250kb

Summary of Sugar and Sweeteners Outlook (Jan. 16, 2014)

Core Content

This report provides an overview of the U.S. and Mexico sugar and sweeteners market outlook for the fiscal years 2012/13 and 2013/14, including details on the Commodity Credit Corporation (CCC) actions to manage sugar surpluses, production and consumption trends, and the impact of these actions on market dynamics.

Main Points

U.S. Sugar Outlook

• USDA Projections: The USDA updated its sugar supply and use projections for the U.S. and Mexico for the fiscal years 2012/13 and 2013/14.
• 2013/14 Projections:
  • Production: The USDA reduced its forecast for Louisiana cane sugar by 100,000 STRV to 1.600 million STRV, based on industry reports.
  • Ending Stocks: Projected at 1.881 million STRV, which implies an ending stocks-to-use ratio of 15.4 percent, down from 16.1 percent.
• CCC Actions:
  • The CCC took 10 separate actions in 2013 to manage surplus sugar, including exchanges of sugar for import access rights and sales to ethanol and non-food users.
  • Total sugar removed from the market was 1,047,490 short tons, with a net cost to CCC of $258,716,027, or 12.4 cents per pound.
  • The CCC managed to avoid July and August-maturing loan forfeitures through these actions.
  • The most expensive actions were sales to bioenergy, followed by FFP sales and then Re-Export credit exchanges.

Mexico Sugar Outlook

• USDA Forecasts: No changes were made to Mexico's sugar supply and use estimates for 2012/13 and 2013/14.
• Production: Mexico's 2013/14 production is forecast at 6.695 million metric tons, which is slightly lower than Conadesuca's expectations.
• Stocks and Consumption:
  • USDA projects ending stocks at 969,000 metric tons, or 22 percent of forecast sugar consumption, which is higher than Conadesuca's forecast.
  • The stocks-to-use ratio is projected at 13.1 percent, indicating a tighter supply-demand balance than in the U.S.
• Export Trends:
  • USDA forecasts Mexico's sugar exports at 2.623 million metric tons, with exports to the U.S. and Puerto Rico at 1.494 million metric tons.
  • This forecast is 207,000 metric tons lower than Conadesuca's export estimate, suggesting a more conservative outlook on exports.

Key Information

U.S. Sugar Supply and Use (Table 1)

• Beginning Stocks: Increased from 1,979 to 2,160 thousand STRV.
• Total Production: Slight decrease from 8,982 to 8,778 thousand STRV.
• Imports: Slightly decreased from 3,224 to 3,184 thousand STRV.
• Exports: Decreased from 274 to 250 thousand STRV.
• Ending Stocks: Projected at 1,881 thousand STRV, down from 2,160 thousand STRV.
• Stocks-to-Use Ratio: Projected at 15.4 percent, down from 16.1 percent.

CCC Actions (Table 2)

• Total Sugar Purchased: 106,742 metric tons.
• Total Sugar Removed from Market: 1,047,490 short tons.
• CCC Net Cost: $258,716,027, or 12.4 cents per pound.
• Most Cost-Effective Actions:
  • Re-Export credit exchanges (cheapest).
  • Sales to non-food use (moderately expensive).
  • Sales to bioenergy (most expensive).
• Notable Actions:
  • On August 30, 2013, the CCC sold 14,235,000 pounds of beet sugar to Front Range Energy for a net cost of $2,733,120.
  • On September 30, 2013, the CCC sold 272,051,214 pounds of beet sugar to various ethanol producers, with a net cost of $53,294,794.

Mexico Sugar Production and Recovery (Figures 1-5)

• Production Trends:
  • Through week 14, 2013/14 production was significantly below expectations.
  • Production in weeks 13 and 14 was 141,782 metric tons below Conadesuca's forecast.
• Recovery Rates:
  • The 2013/14 recovery rate through week 14 was 9.56 percent, far below the 10.36 percent of the previous year.
  • To meet the projected season-long recovery rate, the rate needs to increase by 1.97 percentage points.
  • This increase would be the highest in the past 12 years, as shown in Figure 5.

CCC Forfeiture Data (Appendix Table 3)

• Total Forfeiture Quantity: 763,750,000 pounds, or 381,875 short tons.
• Forfeiture Value: $171,504,450.
• Forfeiture Types:
  • Raw cane: 230,750,000 pounds.
  • Refined beet: 493,000,000 pounds.
  • In-process beet: 40,000,000 pounds.
• Forfeiture Cost:
  • Raw cane: $44,903,950.
  • Refined beet: $119,144,500.
  • In-process beet: $7,456,000.

CCC Sales to Ethanol and Feed (Appendix Table 4)

• Sales to Ethanol Producers:
  • Aventine Renewable Energy, Inc. purchased 270,500,000 pounds of beet sugar at a bid price of 2.654 cents per pound, with sales revenue of $7,178,850.
  • Pacific Ethanol Holding Co. purchased 103,000,000 pounds of beet sugar at 2.000 cents per pound, with sales revenue of $2,060,000.
  • Central Indiana Ethanol purchased 60,000,000 pounds of beet sugar at 3.478 cents per pound, with sales revenue of $2,086,500.

Conclusion

The report highlights the efforts of the USDA and CCC to manage sugar surpluses in the U.S. and Mexico, with the CCC playing a significant role in reducing market supply. While Mexico's sugar production is expected to be lower than Conadesuca's forecast, the USDA maintains a higher ending stocks-to-use ratio, indicating a more balanced market outlook. The report also emphasizes the importance of monitoring recovery rates and the impact of these actions on market dynamics and export forecasts.