Jan. 29 - USDA projects greater sugar production in FY 2008 than FY 2007
The U.S. Department of Agriculture (USDA) projects fiscal year (FY) 2008 production at 8.516 million short tons, raw value (STRV). This projection exceeds FY 2007 production of 8.445 million STRV by 70,470 STRV. Cane sugar production in FY 2008 is projected at 3.697 million STRV, an increase of 259,060 (7.5 percent) over last year. All cane-sugar-producing States are expecting higher production than last year: Louisiana, 169,850 STRV (12.9 percent); Florida, 52,000 STRV (3.0 percent); Texas, 20,710 STRV (11.7 percent); and Hawaii, 16,500 STRV (7.4 percent). Beet sugar production in FY 2008 is projected at 4.819 million STRV, a decrease of 188,600 STRV (3.8 percent), compared with record FY 2007 production of 5.008 million STRV. Although the National Agricultural Statistics Service (NASS) estimates a 6.3-percent decrease in sugar beet production this crop year, national beet sugar per acre is projected by USDA at 3.865 STRV, which if realized, would constitute a record.
The USDA projects FY 2008 sugar imports at 2.241 million STRV. The raw sugar tariffrate quota (TRQ) was established at the minimum level required by the World Trade Organization (WTO)—1.231 million STRV, with TRQ shortfall projected at 100,000 STRV. The refined sugar TRQ was established at 94,251 STRV. The specialty sugar portion of this TRQ, mostly organic sugar, was established at 71,825 STRV. Sugar in imported syrups is projected at 5,000 STRV, and sugar imported under the re-export and polyhydric programs is projected at 425,000 STRV. Imports under the Dominican Republic and Central American Free Trade Agreement (DR/CAFTA) are forecast at 113,405 STRV. FY 2008 marks the first year of DR/CAFTA imports from Costa Rica, projected at 14,815 STRV.
Imports from Mexico, including high-tier tariff (through December 2007) and duty free beginning in January 2008, are projected at 475,000 STRV. These import projections contain considerable uncertainty. The 2007/08 harvest is off to a slow start amid labor unrest, and there is no consensus on how much high fructose corn syrup (HFCS) will be used in Mexico in 2008. Low sugar prices relative to last year may prove a disincentive to switch to HFCS. On the other hand, if USDA projections about Mexican sweetener supply and use prove to be accurate, exports as forecast would still leave an ending-year stocks-to-consumption ratio in Mexico of 29.3 percent, about 6.2 percentage points higher than the ratio for an average of “normal” years since 1997/98.1 Achieving an ending stocks-to-use of 23.1 percent this year would require additional exports of 375,000 STRV (all else constant).
Deliveries for U.S. food and beverage use for FY 2008 are projected at 10.100 million STRV. Other FY 2008 deliveries are projected at 170,000 STRV. Sugar exports, occurring mostly under the Refined Sugar Re-export Program, are projected at 250,000 STRV. Projected FY 2008 ending stocks (the difference between projected supply and use) are 2.005 million STRV, implying a high ending-year stocks-to-use ratio of 19.0 percent.
The nearby No.14 New York raw sugar contract price is averaging 20.37 cents per pound (lb) through the first half of January 2008. This average is at approximately the minimum price to avoid forfeitures. The low end of the range of the Midwest refined beet sugar price is listed by Milling and Baking News at 24.50 cents/lb, the same level since November. The minimum price to avoid forfeiture of refined beet sugar in the Midwest is calculated to be 24.28 cents/lb.
On September 27, 2007, the USDA announced the distribution of the Overall Allotment Quota (OAQ) of 8.450 million STRV among sugar beet processors (4.593 million STRV), sugarcane processors (3.787 million STRV), and imports (70,000 STRV). This latter distribution was due to an earlier determination that sugarcane processors would be unable to fill 70,000 STRV of their initial allotment. With the reassignment to imports, the import trigger for OAQ suspension is 1.602 million STRV (the statutory 1.532 million STRV plus the 70,000 STRV). Total imports less those imports projected under USDA’s re-export and polyhydric programs are calculated at 1.816 million STRV.