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World Sugar Situation
|World centrifugal sugar production for 2000/01 is estimated at 129.7 million tons (raw value), down 4 percent from the record level set in the preceding year. World production of 2001/02 is estimated at 126.8 million tons up less than 1 percent from the May forecast. Brazils 2001/02 production is now placed at 18.5 million tons, up by 1.4 million tons from the preceding year. World sugar consumption for 2001/02 is estimated at 130.7 million tons, up nearly 1 percent from the May forecast and up 1.5 percent from last year. Brazilian exports for 2001/02 are estimated 9.5 million tons, up 5.6 percent from our previous forecast and up 23 percent from last year. Exports from the European Union for 2001/02 are estimated at 3.7 million tons down 7.5 percent from the May forecast and down 44 percent from last year, when shipments totaled 6.6 million tons.|
The 2000/01 world centrifugal sugar production is estimated at 129.7 million tons (raw value), up 1.94 million tons from the May forecast (Circular FS1-01). The 2001/2002 production estimate is revised up from the May circular by 516 thousand tons to total 126.8 million tons. Production for 2001/02 is estimated to be down 2 percent from the previous year. Brazilian production for 2000/01 is now estimated at 17.1 million tons, down 15 percent or 3 million tons from the previous years record of 20.1 million tons. Forecast Brazilian production for 2001/02 is estimated 18.5 million tons, up 4 percent from the May forecast. Production in the European Union (EU) for 2000/01 remains at 18.5 million tons, and production for 2001/02 is forecast at16.2 million tons, down 2.6 percent from the May forecast and down 12.5 percent from last years level.
Unadjusted world sugar imports for 2000/01 are estimated at 35.5 million tons, up by 418 thousand tons from the very high-level set during the previous year. Estimated world exports for 2000/01 are down by 3 million tons and placed at 36.5 million tons. Forecast world exports for 2001/02 are placed at 34.2 million tons down 2 million tons from the previous year. Brazilian exports for 2000/01, are unchanged from the May circular remaining at 7.7 million tons, down 32 percent from the previous year. Brazils exports for 2001/02 are estimated at 9.5 million tons, up 5.6 percent from the May forecast and up 23 percent from last years level. EU exports for 2000/01 are unchanged from the May report, up 7.5 percent from the previous year at 6.6 million tons. Exports for 2001/02 are estimated at 3.7 million tons, down 7.5 percent from the previous estimate and down 44 percent from the 2000/01 marketing year.
World prices for raw sugar (f.o.b. Caribbean Contract No. 11), which were in the doldrums for the two previous years at 7.05 and 7.53 cents per pound averaged 9.80 cents per pound for fiscal year 2001, up 2.47 cents per pound, 33 percent, from FY 2000. Likewise world refined sugar prices (f.o.b. Europe, Contract No. 5 London) were up 2.25 cents per pound and averaged 11.35 cents per pound. This price increase was due to the market moving toward a better balance of supply with demand. World production was down 2 percent, exports were down 5 percent, ending stocks were down 14 percent, and total disappearance was down nearly 2 percent. These figures reflect the reduced volume of sugar in the trading system.
In addition to the TRQ, the Office of the U.S. Trade Representative (USTR) also announced that 20,344 metric tons of the refined tariff-rate quota not reserved for specialty sugar (13,656 tons) or Mexicos NAFTA allocation (137,788 metric tons) is being allocated in the following manner: 10,000 metric tons (11,354 short tons) allocated to Canada, and 2,954 metric tons (3,256) allocated to Mexico. The remaining 7,090 metric tons (7,815 short tons) of the in-quota quantity may be supplied by any country, subject to any other provisions of the law, on a first-come, first-served basis. The 13,656 metric tons (15,053) reserved for specialty sugars may also be supplied by any country, subject to any other provisions of the law, on a first-come, first-served basis.
With respect to the tariff-rate quota for certain sugar-containing products maintained under Additional U.S. Note to Chapter 17 of the Harmonized Tariff Schedule of the United States, 58,250 metric tons (65,312 short tons) is being allocated to Canada. The remainder of the sugar-containing products tariff-rate quota is available for other counties on a first-come, first-served basis.
Total imports of raw and refined sugar from Mexico entering under NAFTA allocation may not exceed 137,788 metric tons (151,885 short tons).
Situation and Outlook in Selected Countries
Sugar production for 2001/02 is estimated at 16.2 million tons, down 2.6 percent from the May forecast and down 12.5 percent from the 2000/0l level of 18.5 million tons. The reduction in production is due to poor growing conditions compounded by problems caused by delayed sowing. Sugar beet yields are expected to drop by 13 percent from the previous years level, which was reduced by 5 percent from the record crop of 1999/2000.
Current estimates of C-sugar production in 2001/02 are only 1.81 million tons as a result of lower overall production, and lower carry-over from the 2000/01 marketing year compared to 5.18 million tons produced in 2000/01.
Council Regulation 1260/2001 set quotas for the production of "A" and "B" sugar from marketing years 2001/02 through 2005/06. These new quotas take into account the permanent reduction of 115,000 tons, and are also subject to annual review to ensure that the EU stays within its WTO limits for export subsidies for sugar. For the 2001/2002 marketing year, no additional reduction was imposed by the Commission, in contrast to marketing year 2000/2001, when a reduction of 498,000 tons was applied. The Commission did not impose an additional reduction this year due to lower use of available subsidies by exporters, along with a willingness to allow stocks to increase from the previous marketing years level.
EU exports for 2001/02 are estimated at a record low of 3.7 million tons, down 7.5 percent from the May forecast and down 44 percent from the 6.6 million tons exported in 2000/01.
Sugarcane production for 2001/02 (May-Apil) is forecast at 272 million tons, a 6 percent increase compared to the revised 2000/01 crop figure. The 2001/02 Total Reduced Sugar (TRS) breakdown for sugar and alcohol is projected at 48.7 and 51.3 percent respectively, compared to 47.2 and 52.8 percent for 2000/01. This shows the increased emphasis to produce sugar, due to favorable prices in the domestic and international markets. Sugar production for 2001/02 is projected at 18.5 million tons, raw value, up 1.4 million tons, from last season. The 2001/02 sugar export estimate is 9.5 million tons, raw value, up 1.8 million tons from 2000/01. Favorable international sugar prices, for the first five months of the marketing year, as well as the further devaluation of the Brazilian currency, by 34 percent since the beginning of the calendar year, stimulated higher sugar exports than previously expected. Brazilian alcohol exports for 2001/02 are projected between 300 and 400 million liters. The current alcohol content in the gasoline-alcohol mixture is set at 22 percent, down from the earlier anticipated 24 percent.
The Mexican sugar industry is characterized by excess production, rising costs, and a devastating cash-flow problem causing mills to fail and prompting a Government bailout to sugarcane growers. Excess production is due to steadily increasing domestic prices providing incentives for increased production. The excess production is exported at a financial loss in order to forgo the costs of maintaining burdensome stocks and to maintain domestic prices.
Domestic consumption remained fairly flat for seven years between 1991 and 1998. Producers would like sugar consumption to rise to provide some support for domestic prices. However, the situation is greatly complicated by competitively priced corn sweeteners. Estimated domestic production of HFCS is between 250,000 and 300,000 tons. Imports, grew rapidly between 1993 and 1997 rising from 50,000 tons to over 350,000 tons. In 1998 imports declined due to the imposition of anti-dumping duties and totaled only 312,000 in 2000. Imports of corn for the wet-milling, which are limited by a TRQ, totaled only 1.8 million tons in 2000.
The revised estimate of Mexican production for 2000/01 is up a negligible 5 metric tons to total 5.223 million tons. However, the 2001/02 production is revised down by108,000 tons to total only 5.092 million tons. Exports for 2000/01 are revised upward by 92,000 tons to total 520,000 tons. The outlook for sugar exports in 2001/02 is brightened due to an increase in the U.S. TRQ for Mexico. Mexico was allocated 148,000 tons for 2001/02 compared to 116,000 tons in the previous year.
On September 3, 2001, the Government of Mexico announced that it would expropriate 27 failing sugar mills for non-payment of this years harvest. The combined debt of these mills is placed at over $1 billion. The expropriated mills represent about 47 percent of sugar production. Thirty-three privately owned mills remain in operation. The Governments intends to sell the expropriated mills to either local or foreign buyers and to have the mills ready for next years harvest to avoid any reduction in production. The expropriation and maintenance of the mills is estimated to cost between $100 million and $327 million.
During the past ten years, Chinas levels of imports and exports were extremely volatile. For this reason China is identified as one of several "swing" countries in the world sugar markets. However, with accession to the WTO, it appears that China is moving toward a more market-oriented approach and should show more consistent production and trade patterns. The closure of unprofitable sugarcane mills and sugar beet factories in 2000/2001 should lower production volumes. News reports indicate that 149 out of 539 sugar refineries were closed during 2000, reducing capacity by 2.6 million tons. This coupled with the reduction of stocks and a WTO commitment to import 1.6 million tons should gradually position China to be a consistent major importer of world sugar. Nevertheless, there are a number of unknowns that may confound this outlook. Despite the reduction in the number of sugar mills and factories, the high domestic prices offered this last year caused some previously closed mills to reopen and provided incentives to boost the area planted to both cane and beets. In addition, the specifics regarding the operation of the sugar TRQ are not public, causing speculation as to near- term import intentions. China is currently the seventh largest importer of sugar. But fulfillment of the WTO commitment could make it the third or fourth largest importer after Russia, the EU, and Indonesia.
The revised estimate leaves 2000/01 production unchanged at 6.9 million tons but lowers imports by 400,000 tons and exports by 74,000 tons. Consumption is increased by 124,000 tons. As a consequence, ending stocks are figured at 850,000 tons, the lowest level in the last twenty years. The revised forecast for 2001/02 reduces production by some 200,000 tons but still places it over the previous years level by 724,000 tons. Imports are forecast at 1.4 million tons, up 223,000 tons from the previous forecast and up 423,000 tons from the previous year. Exports are forecast at 255,000 tons, down nearly100,000 from the May forecast, but up 125,000 tons from the 2000/01 estimate.
Indias position in the world sugar market is critical because it holds 12,400 tons of the worlds 2001 estimated ending stocks and 11,700 tons of the forecasted 2002 ending stocks. These levels account for 38 percent of world stocks. The Indian stock to use ratio is extremely high at 65 to 70 percent. This is more than triple the normal 3-to-4-month carryover pattern.
Although India has never been a large exporter of sugar, it is now in a position to be a major player in the world market. Export prospects are improved due to a continued decline in the value of the rupee and to the relatively firm international sugar prices. Even though international prices are well below domestic prices, by $75 per ton, some holders of sugar are finding it advantageous to liquidate excess stocks by minimizing costs. Estimated 2001/01 exports are at 1.2 million tons, up 700,000 tons from the previous estimate and revising our 2001/02 export estimate to 1 million tons, up 800,000 tons from the May forecast.
Estimated Indian production for 2000/01 is revised upward by 1 million tons to total 20.4 tons. Forecasted 2001/02 production is also revised upward by 1.6 million tons to total 18.3 million tons. Firm government cane prices have limited the normal decline in area planted and favorable 2000 monsoon rains boosted production. In addition, the quantity of cane moving to crushers increased due to low early season "gur" prices and the higher cost of cane.
Sugar production for the 2001/02 marketing year is estimated to reach 1.6 million tons, up 50,000 ton from last year and up 100,000 tons from marketing year 2000. This is partially due to the continuing restriction of imports through the quota and seasonal duty policy. Russia continues to be the worlds largest importer. Russian sugar imports for 2000/01 are estimated at 5.2 million tons, up 35 percent from the May forecast of 3.85 million tons and close to the 2000 marketing year level. Imports for 2001/02 are now estimated at 4.35 million up 14 percent from the May forecast and 500,000 tons over the TRQ.
During this years tariff-rate quota auction, lower bid prices for quota licenses indicate that traders learned a lesson from last years high bid prices, which allowed out-of-quota sugar imports to remain competitive. As world prices of raw sugar declined, imports surpassed the 2001 TRQ allocation of 3.65 million tons. Thanks in part to the TRQ, the domestic price of sugar has increased significantly in comparison to its price before the TRQ regime began. However the domestic price is above the out-of-quota price for international sugar. Lower international prices should dampen demand for domestic sugar by prompting end users to import more raw sugar for future processing.