Latest WASDE Report Shows Constant Sugar Supply

Pat Henneberry

When ISC’s market expert Pat Henneberry talks about the supply of sugar in the United States, he measures things in tons, citing the latest statistics from the USDA’s WASDE – World Agriculture Supply and Demand Estimate.

Even with fluctuations in the tonnage of sugar being grown in the U.S. and imported here from Mexico and other countries, the supply of sugar remains pretty constant, Henneberry notes after reviewing the USDA’s July WASDE report – the industry’s “bible.”

Economists and market analysts from the U.S. Department of Agriculture (USDA) generate the monthly WASDE, which forecasts supply and demand for most U.S. and many global crops and livestock products.

For the remainder of the current 2008/2009 season, which ends in September, Henneberry points out the agency lowered its estimate of the U.S. sugar beet crop by 110,000 tons – down to 4.15 million tons. The most likely reason for the reduction is a delayed start to the harvest, which follows from a late planting of the sugar beet crop this spring, he says.

Offsetting this reduction in supply, the USDA increased its estimate of sugar imports from Mexico for the current season – up by 150,000 tons for raw and refined sugar. In the opposite direction, the agency is decreasing the sugar import quota by 40,000 tons.

Taking in all of this information, Henneberry, senior vice president of Commodities Management, says: “The net-net is … there’s zero change in the current supply. Mexico went up by 150,000 tons. Imports went down by 40,000 tons. And, this season’s beet harvest went down by 110,000 tons.”

On the demand side, the USDA is increasing its estimate by 100,000 tons based purely on the refined portion of the 150,000 tons of increased sugar imports from Mexico. Overall for the 2008/2009 season, the USDA has increased its demand estimate to 10.765 million tons, which leaves the market with 100,000 tons less ending stocks of sugar as of September 30.

Assessing the July WASDE report, Henneberry says: “The flow of sugar to the marketplace is more or less unchanged (for this current season).”

Looking to the 2009/2010 season, the USDA increased its estimate of the beet crop by 100,000 tons. “This is just a shift in the timing – from one growing season to the next – for the sugar removed from the 08/09 estimate.”

Offsetting this increase, the USDA has decreased its estimate of the Florida sugar cane crop by 100,000 tons. “That leaves the domestic supply for next year sharply unchanged.”

For the upcoming season, the agency’s estimate for demand remains the same. “Overall, the report shows, once again, the U.S. will have to increase imports for next year to keep the supply sugar balanced … to have sufficient sugar to supply the market’s needs.”

The agency knows it has work to do in this area, says Henneberry, but it won’t likely be until after April 1, 2010 before final adjustments to imports are made.

Click here for the USDA’s WASDE report.