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Summary of the Sugar and Sweeteners Outlook (October 2017)

Core Content

The October 2017 World Agricultural Supply and Demand Estimates (WASDE) report provides an updated outlook for the U.S. and Mexican sugar markets for the 2017/18 fiscal year. The report highlights the interplay between domestic production, imports, exports, and ending stocks, and discusses the impact of weather events and trade policy changes on these figures.

Main Points

U.S. Sugar Market Outlook

• Domestic Production:

  • Total sugar production for 2017/18 is projected at 8.863 million STRV, a 66,000 STRV decrease from the previous month.
  • Cane sugar production is reduced by 26,000 STRV due to Hurricane Irma's impact on Florida, though the Louisiana crop is expected to be larger, offsetting some of the losses.
  • Beet sugar production is reduced by 40,000 STRV due to a smaller sugarbeet crop and a shift of early-season production into the previous fiscal year.

• Imports:

  • Total sugar imports for 2017/18 are projected to increase by 142,000 STRV, reaching 3.830 million STRV.
  • The increase is attributed to quota programs, re-export program, and Mexico.
  • Mexican imports are raised by 18,000 STRV to 1.789 million STRV for 2017/18.

• Exports:

  • Exports for 2017/18 are projected at 50,000 STRV, up from 100,000 STRV in 2016/17.
  • The increase is due to a shift in shipping patterns and the re-export program.

• Deliveries:

  • Domestic deliveries for food and beverage use are unchanged from the previous month.
  • The forecast for 2017/18 is 12.523 million STRV, an increase from 12.200 million STRV in 2016/17.
  • Beet sugar deliveries have been strong, contributing to the overall increase in deliveries.

• Ending Stocks:

  • Ending stocks for 2017/18 are projected at 1.697 million STRV, up from 1.732 million STRV in the previous month.
  • The stocks-to-use ratio is 13.3 percent, slightly increased from 13.2 percent.

• Market Outlook:

  • Tight supplies and high domestic prices are expected to drive market dynamics in 2017/18.
  • The stocks-to-use ratio for 2016/17 is 13.9 percent, down from 14.1 percent.

Mexican Sugar Market Outlook

• Beginning Stocks:

  • Beginning stocks for 2017/18 are increased by 15,000 MT, reaching 1.046 million MT.
  • This increase is due to adjustments in trade and an increase in imports.

• Production and Imports:

  • Projected production for 2017/18 remains 6.100 million MT, unchanged from the previous month.
  • Projected imports for 2017/18 are 75,000 MT, unchanged from the previous month.

• Deliveries:

  • Domestic deliveries are projected at 4.864 million MT, including 4.534 million MT for human consumption and 330,000 MT for the IMMEX program.

• Exports:

  • Exports to the U.S. and Puerto Rico are projected to increase to 1.531 million MT, while exports to other countries are expected to be 10,000 MT.

• Ending Stocks:

  • Ending stocks for 2017/18 are projected at 816,000 MT, representing 18.0 percent of human consumption deliveries.

• Prices:

  • Mexican sugar prices are expected to remain high due to constrained supplies.
  • Average wholesale prices in Mexico City fell slightly to 36.4 cents per pound in September.

Key Information

• Hurricane Impact:

  • Hurricane Irma affected Florida's sugarcane production, reducing it by 90,000 STRV.
  • Despite this, sugarcane production in Florida is expected to remain relatively strong due to increased harvested area and yields.

• Louisiana's Performance:

  • Louisiana's sugarcane production is projected to increase by 64,000 STRV to 1.690 million STRV.
  • The crop is in better condition than the previous year, with early harvest progress.

• Trade Adjustments:

  • Changes in IMMEX regulations have reduced U.S. sugar exports to Mexico.
  • However, increased imports from Mexico are expected to support U.S. exports.

• Supply Constraints:

  • The U.S. market is expected to face tight supplies and high prices in 2017/18 due to lower domestic production and increased imports.

• Market Transitions:

  • The sugar export market is transitioning due to changes in trade policies and shipping patterns.

• Resources and Notifications:

  • Readers can subscribe to ERS email notifications for updates on reports and data.
  • Tables and reports are available on the ERS website for further analysis.

Conclusion

The 2017/18 U.S. sugar market outlook is characterized by a reduction in domestic production, but this is offset by higher imports, particularly from Mexico. The stocks-to-use ratio is slightly increased, and tight supplies are expected to continue influencing prices and trade dynamics. In Mexico, increased beginning stocks and stable production support a higher export outlook to the U.S., although domestic demand remains a key constraint. The report underscores the importance of weather events, trade policies, and market trends in shaping the sugar outlook for the coming year.