20220315-USDA-USDA_Sugar_and_Sweeteners_Outlook_2022.3.15_27页_2mb

Sugar and Sweeteners Outlook: March 2022 Summary

Core Content Overview

This report provides an analysis of U.S. and Mexican sugar production, imports, and use for the 2021/22 fiscal year, as well as insights into the sugar market dynamics, including price differentials and trade policies.

Main Points

U.S. Sugar Outlook

• Ending Stocks: Reduced to 1.692 million short tons, raw value (STRV), a decrease of 126,152 STRV from the previous month. This is due to lower domestic production and higher use.
• Supply and Use: Total supply for 2021/22 is forecasted at 14.131 million STRV, while total use is projected at 12.441 million STRV, resulting in a stocks-to-use ratio of 13.6%, down from 14.7% in February.
• Production Trends:
  • Beet Sugar: Production is forecasted at 5.389 million STRV, down 12,183 STRV from the previous month, mainly due to lower sucrose extraction and higher beet pile shrink.
  • Cane Sugar: Florida production is reduced to 1.960 million STRV, influenced by the late January freeze. Louisiana and Texas production remains unchanged.
• Imports:
  • Total imports increased by 31,091 STRV to 3.043 million STRV, still the lowest since 2008/09.
  • WTO TRQ imports increased by 20,591 STRV to 1.568 million STRV.
  • High-tier imports increased by 25,000 STRV to 175,000 STRV.
• Export Limit: The U.S. Department of Commerce's Export Limit is expected to be 1.037 million STRV, down 14,500 tons from the previous month.
• Deliveries: Domestic deliveries for food and beverage use increased by 100,000 STRV to 12.3 million STRV, reflecting a 1.4% increase from the 2020/21 level of 12.135 million STRV.

Mexico Sugar Outlook

• Supply and Use: Minimal changes in 2021/22 sugar supply and use compared to the previous month.
• Imports: Mexico's imports are forecasted at 1.050 million STRV, which includes 12,812 STRV from the 2020/21 export allocation that was permitted to enter in October 2021.
• Export Limit: Mexico's export limit is expected to be slightly lower than the previous month, based on the Suspension Agreement.

Key Information

• Import Trends: Despite a slight increase, total imports remain historically low.
• Price Margins: The price margin for raw sugar between the U.S. and world futures is below the threshold for economical high-tier imports.
• Market Volatility: The non-reporter delivery component is a key source of volatility in the forecasting process.
• Production Scenarios: Three production scenarios are presented for the 2021/22 crop year:
  • Scenario A: Assumes the current forecast of 5.346 million STRV will be achieved.
  • Scenario B: Uses the 2017/18 crop year as an analog, suggesting potential for a strong late-season campaign if conditions are favorable.
  • Scenario C: Assumes a 5-year average, leading to a more conservative estimate of 5.030 million STRV.
• Geopolitical Factors: The Russian-Ukraine conflict has not yet had a major impact on the sugar market, but it could influence world sugar prices through crude oil prices and trade bans.

Summary of Market Dynamics

• Price Differentials: High-tier refined sugar imports are feasible due to a price margin of around 28 cents per pound, which exceeds the cost of importing high-tier sugar.
• Production Outlook: Beet sugar production is expected to be slightly below the 2017/18 record high, but still likely to surpass previous levels.
• Import Composition: WTO raw sugar TRQ and high-tier tariff imports dominate the total forecast, accounting for 63% and 72% respectively.

Conclusion

The U.S. sugar market for 2021/22 shows a decrease in ending stocks and a lower stocks-to-use ratio. While domestic production has been affected by lower sucrose extraction and higher shrink, imports have increased slightly. The market is closely monitored for the remaining months, especially for non-reporter deliveries, and future production forecasts will depend on the availability of data from the USDA's Prospective Plantings report. The price dynamics and trade policies, particularly those influenced by the Russian-Ukraine conflict, could impact the market significantly in the coming months.