WASDE: No Change in Sugar Supply
isc | Dec 16, 2009
The December USDA WASDE report – World Agriculture Supply and Demand Estimate – shows no change from the previous month in projected 2009/2010 sugar supply and use. Reporting December 10, the USDA estimated domestic sugar supply at 11.6 million tons, down 5.2 percent compared with a year earlier. Total use is estimated at 10.6 million tons, down 1.9 percent.
Commenting on the numbers that go into the report, Imperial Sugar’s Chief of Commodities Management Pat Henneberry said the beet production estimate of 4.4 million tons is possibly too high. “Recent weather has not been favorable to the harvest nor to the condition of beets in piles, which will be processed over the winter. A result of under 4.4 million tons is increasingly likely.”
Pat Henneberry, Imperial Sugar Company
According to Henneberry, there are other market dynamics that could have an impact on the demand side of the supply-demand equation. Manufacturers of beverages and other consumer products are starting to use sugar instead of high fructose corn syrup in some of their products. “This would be positive to sugar consumption,” he said.
Factors that could offset demand include the announcement that General Mills will reduce the sugar content of some brands of cereal by up to 25 percent. “It’s too early to know with certainty which of these influences will be larger,” Henneberry said. “The beginning of an economic recovery should also restore some of the lost luster of sugar demand and could cause consumption to continue to grow with the population.”
While the USDA is still showing a decline in domestic sugar consumption for 2009/2010, Henneberry said he sees no indication that demand will be lower than in 2008/2009. He further stated the U.S. needs more imported raw sugar and that we could expect more from the USDA in April, if not before. “With the inversion in price in the world sugar market, it is important that the USDA and USTR make their intentions known early before available supplies move to other countries.”
Click here for the WASDE Report.
