20171116-USDA-USDA_Sugar_and_Sweeteners_Outlook_2017.11.16_15页_1mb

Sugar and Sweeteners Outlook Summary

Core Content

This document provides an overview of the U.S. and Mexican sugar markets for the 2017/18 fiscal year, including production, supply, demand, and export forecasts. It highlights the changes in market fundamentals, inventory levels, and price dynamics between the beet and cane sugar sectors, as well as the impact of policy decisions and market developments on supply and demand.

Main Points

U.S. Sugar Market Outlook

• Projected Ending Stocks for 2017/18: Increased by 78,000 STRV due to higher beginning stocks and reduced domestic deliveries.
• Domestic Deliveries for 2017/18: Projected at 12.400 million STRV, a 123,000 STRV decrease from the previous month's estimate.
• Total Production for 2017/18: Estimated at 8.836 million STRV, a decrease of 27,000 STRV from the October projection.
• Beet Sugar Production: Reduced by 150,000 STRV compared to 2016/17, due to strong early-season deliveries that brought inventories down.
• Cane Sugar Production: Remains at 3.886 million STRV, unchanged from the previous month's forecast.
• Imports for 2017/18: Projected at 3.710 million STRV, a decrease of 120,000 STRV from the previous month, mainly due to reduced quota imports and Mexican imports.
• Stocks-to-Use Ratio: Expected to be 14.08 for 2017/18, reflecting a more balanced market compared to 2016/17.

Mexico Sugar Market Outlook

• Total Sugar Supplies for 2017/18: Projected at 7.197 million MT, a 24,000-MT reduction from the previous month's projection.
• Production for 2017/18: Estimated at 6.100 million MT, unchanged from the previous month.
• Imports for 2017/18: Projected at 95,000 STRV, reflecting reduced availability from quota programs and Mexico.
• Exports to the U.S.: Reduced by 81,000 MT to 1.450 million MT, primarily due to constrained supplies and higher domestic deliveries.
• Ending Stocks for 2017/18: Projected at 825,000 MT, a 44,000-MT decrease from the previous month's estimate.
• Stocks-to-Use Ratio: Expected to be 12.9 percent, indicating a tighter market than in previous years.

Key Information

Inventory Trends

• U.S. Beet Sugar Inventories: Ended 2016/17 at 891,000 STRV, slightly above the 5-year average, reflecting a return to historical levels.
• U.S. Cane Sugar Inventories: Remained tight for most of the year but increased at the end due to imports, aligning with beet inventories by the end of the year.
• Mexico Sugar Inventories: Showed a significant reduction in beginning stocks, contributing to tighter market conditions in 2017/18.

Price Developments

• Refined Cane vs. Beet Sugar: Cane sugar prices held a premium over beet sugar, narrowing from 5.5 cents to 2.5 cents per pound over the year.
• Mexican Sugar Prices: The wholesale estandar price in Mexico City fell below 40 cents per pound for the first time since June, but remains above U.S. raw sugar prices.

Policy Impact

• WTO TRQ Extension: The extension of the 2016/17 TRQ into the 2017/18 fiscal year affected import volumes and export expectations.
• Suspension Agreements: Agreements with Mexico influenced the availability of sugar for export, with constraints based on sugar specifications (polarity) and U.S. Needs calculations.

Market Convergence

• The divergence in market fundamentals between beet and cane sectors in 2015/16 has been largely resolved, with both sectors returning to more comparable inventory and price levels.
• The U.S. sugar market is expected to reflect historical patterns of supply and demand, assuming no new shocks.

Summary

The U.S. and Mexican sugar markets are undergoing a shift in supply and demand dynamics for the 2017/18 fiscal year. U.S. beet sugar production is down due to early-season strong deliveries, while cane sugar production remains stable. Mexico's sugar market is tighter due to reduced beginning stocks and higher domestic deliveries, leading to lower export volumes. Inventory levels are returning to more balanced positions, and prices are converging, though U.S. refined cane sugar still holds a premium over beet sugar. Policy changes and market developments continue to shape the outlook, with a focus on supply constraints and export availability.