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Sugar and Sweeteners Outlook Summary (SSS-M-358, June 18, 2018)

Core Content Overview

This report provides an outlook for U.S. and global sugar markets for the 2017/18 and 2018/19 fiscal years, based on the July World Agricultural Supply and Demand Estimates (WASDE). It highlights changes in production, imports, exports, and ending stocks, as well as the impact of agricultural and trade policies on market dynamics.

Main Points and Key Information

U.S. Sugar Market Outlook

• Market Tightness: U.S. sugar markets are projected to be slightly tighter in 2017/18 and 2018/19 compared to the previous month.
• Stocks-to-Use Ratio:
  • For 2017/18, the ratio is estimated at 14.9 percent, a slight decrease from the previous month's 15.0 percent.
  • For 2018/19, the ratio is projected at 11.5 percent.
• Supply Projections:
  • Total sugar supplies for 2018/19 are estimated at 14.203 million STRV, a decrease of 44,000 STRV from the May report.
  • Ending stocks are expected to drop to 1.463 million STRV, a 79,000 STRV reduction from the previous month.
• Production Trends:
  • Cane sugar production in 2017/18 is estimated at 9.238 million STRV, a 14,000 STRV reduction due to lower production in Florida.
  • Florida's cane sugar production is expected to rebound in 2018/19 to 2.085 million STRV, assuming normal weather.
  • Louisiana and Texas production remain unchanged at 1.680 million STRV and 160,000 STRV, respectively.
  • Beet sugar production for 2017/18 is estimated at 5.221 million STRV, with no significant change in 2018/19.
• Import and Export Projections:
  • Total imports for 2017/18 are projected at 3.387 million STRV, a 35,000 STRV decrease from the previous month.
  • Imports under the re-export program are reduced to 300,000 STRV.
  • Exports for 2017/18 remain at 170,000 STRV, while 2018/19 exports are projected to increase to 85,000 STRV.
  • Mexican imports are expected to rise slightly in 2018/19 due to increased trade with the U.S.
• Deliveries:
  • Domestic deliveries for 2017/18 are reduced to 12.300 million STRV, primarily due to slower cane deliveries.
  • Beet deliveries have exceeded the previous year's pace, but are expected to moderate in 2018/19.
  • Cane refiners are projected to increase their delivery rates in the second half of the year, influenced by strong refining margins and raw sugar availability.

Mexico Sugar Market Outlook

• Import Projections:
  • For 2018/19, projected imports are increased by 31,000 MT to 1.014 million MT.
  • Imports for domestic human consumption are expected to rise, linked to increased U.S. exports.
• Production and Stocks:
  • Mexico's 2017/18 sugarcane harvest is nearing completion, with production estimated at 5.970 million MT.
  • Ending stocks for 2017/18 are estimated at 1.243 million MT, with a stocks-to-consumption ratio of 28.7 percent.
  • For 2018/19, ending stocks are expected to be 1.014 million MT, reflecting a 22.2 percent stocks-to-consumption ratio.
• Exports:
  • Exports to the U.S. and Puerto Rico are projected to increase in 2018/19, reaching 1.492 million MT.
  • Exports to other countries are expected to be lower, at 11 million MT.

Global Sugar Market Outlook

• Production Surpluses:
  • Global sugar production in 2017/18 reached a record 191.8 million MTRV, a 10.3-percent increase from the previous year.
  • Production surplus for 2017/18 is estimated at 17.4 million MTRV, up from the November 2017 projection.
  • The surplus is expected to decline slightly in 2018/19 to 188.3 million MTRV, but will still be large by historical standards.
• Consumption and Inventories:
  • Global human consumption is projected to increase by 2.0 percent in 2018/19, reaching 177.6 million MTRV.
  • Global ending stocks are expected to be 49.5 million MTRV in 2017/18, a record high.
• Market Dynamics:
  • The global market is expected to remain relatively stable with low prices due to large supplies.
  • Production surpluses are likely to carry over into 2018/19, influenced by growing conditions in major producing regions like Brazil, South Asia, and Southeast Asia.
  • Policies in major producing countries may influence trade flows and export levels.

Key Influences

• Weather and Production Conditions:
  • Wet late-season conditions in Florida reduced cane sugar production.
  • Good growing conditions in South and Southeast Asia contributed to increased sugar production.
• Trade Policies:
  • The re-export program and U.S. Export Limit play a significant role in shaping import and export dynamics.
  • Suspension agreements with Mexico have limited trade volumes and affected market channels.
• Market Trends:
  • Global sugar prices are expected to remain low due to high production and surplus.
  • The U.S. sugar market is expected to see a slight tightening, with reduced supplies and increased use.

Summary of Key Figures

Conclusion

The U.S. sugar market is expected to remain slightly tighter in 2017/18 and 2018/19 due to reduced production and imports, while global markets are projected to maintain large surpluses and low prices. Trade policies, particularly in Mexico and the U.S., are expected to influence import and export levels, and the market outlook for both domestic and international sectors is shaped by production trends, weather conditions, and trade agreements.