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Summary of Sugar and Sweeteners Outlook (July 2017)

Core Content

The Economic Research Service (ERS) released the July 2017 World Agricultural Supply and Demand Estimates (WASDE) report, providing an outlook for U.S. and Mexican sugar markets for the 2016/17 and 2017/18 fiscal years. The report highlights changes in production, imports, domestic deliveries, and ending stocks, emphasizing the impact of policy and market conditions.

Main Points

U.S. Sugar Market (2016/17)

• Domestic Deliveries: Increased by 100,000 STRV to 12.455 million STRV for 2016/17, driven by strong food and beverage deliveries.
• Production:
  • Cane Sugar: Increased by 4,000 STRV to 8.836 million STRV, due to higher production in Florida.
  • Beet Sugar: Remained at 4.988 million STRV, unchanged from the previous month.
• Imports: Stayed at 3.130 million STRV, with no change in quota-based imports.
• Ending Stocks: Reduced by 96,000 STRV to 1.440 million STRV, with a stocks-to-use ratio of 11.5%, down from 12.3% in the previous month.

U.S. Sugar Market (2017/18)

• Production:
  • Total Sugar: Projected at 8.738 million STRV, unchanged from June.
  • Beet Sugar: Remains at 4.988 million STRV.
  • Cane Sugar: Unchanged at 3.750 million STRV.
• Imports: Increased by 226,000 STRV to 3.557 million STRV, including a 176,000 STRV increase in quota-based imports and a 50,000 STRV increase from Mexico.
• Domestic Deliveries: Projected to rise to 12.578 million STRV, with food and beverage deliveries at 12.423 million STRV, an increase of 101,000 STRV from the June report.
• Ending Stocks: Projected at 1.132 million STRV, with a stocks-to-use ratio of 9.0%, up from 8.8% in June.

Mexican Sugar Market (2016/17)

• Total Supply: Estimated at 7.079 million MT, a decrease of 18,000 STRV from the previous month.
• Production: Estimated at 5.957 million MT, down by 28,000 MT.
• Imports: Increased by 10,000 MT to 85,000 MT, based on reported trade data.
• Domestic Deliveries: Unchanged at 4.851 million MT, with human consumption at 4.461 million MT.
• Ending Stocks: Estimated at 1.068 million MT, down by 33,000 MT from the previous month.
• Stocks-to-consumption ratio: At 23.9%, compared to 24.7% in June.

Mexican Sugar Market (2017/18)

• Production: Forecast at 6.100 million MT, reflecting a potential increase.
• Imports: Projected at 75,000 MT, with a reduction in exports to non-U.S. destinations.
• Exports to U.S. & Puerto Rico: Increased to 1.561 million MT, reflecting market integration.
• Ending Stocks: Projected at 815,000 MT, down from 1.068 million MT in 2016/17.
• Stocks-to-use ratio: Estimated at 12.7%, indicating a tightening supply-demand balance.

Key Information

• Market Integration: The integration of U.S. and Mexican sweetener markets since NAFTA has led to more stable demand patterns.
• Policy Impact: Changes in U.S. and Mexican policies, such as the suspension agreements and GMO labeling laws, have influenced delivery patterns and market volatility.
• Price Trends:
  • U.S. Raw Sugar: June average price was 27.83 cents per pound, down from 29.44 cents per pound in January.
  • Mexican Estandar Sugar: June average price was 40.36 cents per pound, a 46.2% increase since January, indicating a premium over U.S. prices.
• Beet Sugar Production: Benefited from lower extraction rates and higher beginning stocks, leading to increased deliveries in 2016/17.
• Cane Sugar Production: Experienced a 5.5% decline in domestic deliveries compared to the same period in 2016, primarily due to lower production in Florida and Louisiana.
• Mexico's Domestic Deliveries: Slightly below the previous year but offset by higher HFCS consumption.

Conclusion

The July 2017 WASDE report reflects a strong pace of U.S. domestic deliveries in 2016/17, driven by beet sugar production and policy-related shifts. The 2017/18 outlook indicates a resumption of longer-term trends, with increased imports and domestic deliveries. In Mexico, ending stocks have decreased, and price premiums have risen, suggesting a tightening market. The report underscores the impact of policy and market dynamics on sugar supply and demand in both countries.