U.S. sugar production in 1999/00 is
forecast at 7.62 million metric tons, an increase of 4
percent over the previous year. Sugar beet production is
forecast to rise 7 percent to 4.11 million tons, based on
an average yield of 3 tons of sugar per acre. Sugar cane
is forecast to increase by 1.5 percent, due mainly to
increased area planted and higher expected yields in
Louisiana. The revised 1998/99 production forecast is set
at 7.32 million tons, a slight increase over 1997/98
production.
U.S. exports in 1999/00 are forecast at
159,000 tons, the same as the current year’s level.
Major U.S. export markets are Canada, Mexico, and
Jamaica.
For fiscal year 1999, the U.S. Trade
Representative has allocated 1.16 million tons of sugar
imports under the raw sugar tariff rate quota (TRQ). The
150,000 ton January, March, and May tranches were
canceled because the 1998/99 U.S. stocks-to-use ratio
forecast in those issues of the USDA’s World
Agricultural Supply and Demand Estimates report was
greater than 15.5 percent.
During the first quarter of 1999, the gap
between the average U.S. and world raw sugar prices has
become the largest since 1987. While the U.S. #14 raw
sugar price has held at an average price of 22.48 cents
per pound since January, world raw sugar prices are at a
12-year low.
Canada
Canadian sugar production in 1999/00 is
forecast to increase by 6 percent to 138,000 tons. This
increase in production is due to an 18 percent increase
in sugar beet plantings in the main producing province,
Alberta. This increase in intended planted area marks the
second year of a planned planting expansion in
conjunction with a modernization project and processing
capacity expansion begun by the Alberta Sugar Beet
Growers Marketing Board. However, there are concerns over
the operations of the newly renovated Rogers Sugar Plant,
which may lead to a slight reduction in the actual area
planted. In early 1999, Rogers Sugar announced that it
agreed to a one-time settlement with Alberta Sugar Beet
Growers, relating to a volume of sugar beets that were
not processed due to a late start at that plant.
With only minor production of domestic
beet sugar, Canadian demand is met primarily through
imports of raw sugar. Raw sugar is imported and then
processed into refined sugar. Total imports are forecast
to remain at 1.1 million tons in 1999/00, the same as the
previous year. Refined sugar imports, which generally
enter under a duty drawback program with anti-dumping
duties refunded if the sugar is incorporated into
products that are subsequently re-exported, are also
forecast to continue at the same level.
Mexico
Sugar production in Mexico for the 1999/00
marketing year is forecast at 5.15 million tons, a slight
increase from last year’s revised output. The
Mexican industry does not foresee any increases in
planted acreage under current world sugar market
conditions. Financial problems and lack of loan
availability will also constrain any efforts at
significant increases in mill efficiency.
Exports in 1999/00 are forecast at 900,000
tons, a decrease of 6 percent from the previous year. The
export forecast is highly dependent on the production of
sugar and the substitution of alternative domestic and
imported sweeteners. However, compensatory duties on HFCS
may reduce the level of imports from the United States,
lessening the amount of import substitution.
Domestic consumption of sugar is expected
to remain flat in 1999/00. Many factors have weakened
consumer purchasing power, and thus, domestic demand for
sugar in Mexico. The Mexican sugar industry maintains
that sugar consumption in Mexico is not growing in part
due to substitution of alternative domestic and imported
sweeteners.
Caribbean/Central/South America
Cuba
Cuban sugar production in 1999/00 is
forecast at 3.5 million tons, unchanged from last season,
but up 9 percent from the poor harvest of 1997/98. The
1999/00 harvest is expected to do relatively well
compared to the more recent harvests due to changes in
management strategy. This has resulted in efforts to
raise efficiency in all aspects of production. Further,
strict directives have been issued which prohibits the
cutting of young cane, a common practice to meet
Government quotas. Some improvement may have been gained
by utilizing only the more efficient mills and by
reducing costs throughout the industry from field to
mill. However, even with increased production, revenue
from sugar may fall as a result of very low world sugar
prices. Cuba's 1998/99 sugar production forecast was
revised up to 3.5 million tons, 10 percent above the
previous forecast. The 1997/98 outturn of 3.2 million
tons was the lowest in 50 years.
Cuban exports of sugar in 1999/00 are
expected to decline slightly to 2.4 million tons, due to
increased competition in the world sugar market. The
Cuban Sugar Ministry had set a goal of boosting
production to the 6.0 million tons by 2001, but possible
drought, low levels of planting, slow germination, and
financing problems will make this goal difficult to
reach.
Dominican Republic
Sugar production in the Dominican Republic
in 1999/00 is forecast at 440,000 tons, 5 percent above
the revised 1998/99 output. The lower 1998/99 forecast
reflects the impact of hurricane Georges on Dominican
sugar production and processing.
In 1999/00, exports are forecast to
decrease 16 percent to 200,000 tons. The higher
production is expected to be added into stocks, rather
than exported, due to current low world raw sugar prices.
The Dominican Republic is the largest supplier of sugar
to the United States under the Sugar TRQ. The United
States also represents the Dominican Republic’s
largest export market.
Guatemala
Guatemalan sugar production in 1999/00 is
forecast to decrease 6 percent to 1.46 million tons. A 10
percent decrease in the planted sugarcane area is the
reason for the smaller production forecast. The plantings
directly correspond to cane contracts offered by the
mills and vary relative to the profitability of
alternative crops, such as bananas and palm. The low
world price for raw sugar has been a key deciding factor
in comparing the relative returns expected between the
different commodities. The 1998/99 year was intended to
be a year of increased cane and sugar yields and
improvements in fertilization, irrigation, and maturation
of the cane. However, unfavorable weather and the effects
of hurricane Mitch caused a large decrease in the cane
yields, though sugar recovery remained roughly the same.
Exports of sugar from Guatemala are
forecast to fall in 1999/00 to 1.02 million tons, due to
smaller supplies. The export forecast in 1998/99 was
reduced to 1.12 million tons, also due to the reduced
availability. Main non-U.S. export destinations include
Peru, Russia, Canada, Chile, and Mexico. Guatemala’s
initial allocation under the United States raw sugar
tariff rate quota for FY 1998/99 is set at 51,997 tons.
Brazil
The preliminary forecast for Brazilian
sugar production for the 1999/00 marketing year is 19.0
million tons, up 4 percent from the previous year. The
total cane crush is forecast at 300 million tons, with a
larger percentage of cane going into sugar. The situation
for this forecast year is still uncertain because of the
general economic difficulties in Brazil and problems in
the alcohol sector. Exports are forecast to rise to a
record 8.8 million tons and stocks will continue to
build. The actual export level in the coming year will
depend on world raw sugar prices and the ability and
willingness of key trading partners to import more sugar.
A key variable will be Russia’s ability to import
during the latter half of 1999.
The 1998/99 sugar production estimate was
revised up to 18.3 million tons, 10 percent above the
previous forecast. Total Brazilian sugarcane production
for the 1998/99 marketing year is 308 million tons, of
which the Center-South region accounts for 269 million
tons. The unexpectedly large production was the result of
dry weather during November and December, which allowed
millers to extend the sugarcane harvest and crush, and
higher-than-expected cane yields. Additionally, very high
alcohol stocks reduced alcohol prices relative to sugar,
thus making the sugar price more attractive. The
Brazilian alcohol sector has been under increased
pressure recently, as high carry over stocks and
financial problems associated with Brazil’s overall
macroeconomic difficulties have plagued the industry.
Exports for the 1998/99 season were also
revised upward to 8.55 million tons, based on the large
domestic surplus and the need for millers to generate
cash flow to service debts. Despite relatively low world
prices for raw sugar, Brazilian exports gained momentum
in early 1999 because exports offer better prices versus
the domestic sugar or alcohol markets. The January 18
devaluation of the Brazilian currency also helped to
offset some of the losses associated with the decline in
world sugar prices. Brazil’s main export destination
is Russia, but other key markets are the United States,
the United Arab Emirates, and Egypt.
The Brazilian Government has taken
measures to continue its alcohol program, which promotes
the consumption of both hydrated and anhydrous alcohol.
The program is intended to promote alcohol as an
strategic source of energy, the industry as a source of
employment, and alcohol as a cleaner form of energy.
Additionally, a measure became effective on June 15, 1998
that increased the mandatory amount of anhydrous alcohol
blended with all gasoline from 22 to 24 percent. This
increase in the percentage of alcohol blended into
gasoline is expected to increase demand by 500 million
liters annually. The Government of Brazil is studying the
mixing of hydrated alcohol with diesel fuel, which would
further increase alcohol demand within the country.
European Union
Total sugar production in the European
Union in 1999/00 is forecast at 18.4 million tons, up 3
percent from the previous year’s output. Beet
planting intentions are forecast 1.4 percent lower, but
yields are forecast to rebound from the poor 1998/99
yields. The 1998/99 production forecast was reduced
slightly to 17.8 million tons, 8 percent below the record
harvest of 1997/98.
The majority of the decline in
1998/99 was due to a 6 percent decline in sugar beet
yields and a 3 percent decline in area.
Sugar in the European Union is produced
under a system of quotas. This policy is generally
designed to support internal prices to ensure producer
returns, maintain refining capacity, restrict imports to
specified trading partners, and subsidize exports of
domestically produced sugar. EU member states are
allocated a "A" and "B" production
quota, which is established until 2000/01. Any sugar that
is produced by any member of the EU that is in excess of
its yearly quota is considered "C-sugar." A and
B sugar production are used for domestic consumption and
as subsidized exports, while C-sugar must be exported
into the world market without a subsidy or carried over
into the next marketing year.
Exports from the EU in 1999/00 are
forecast to increase 13 percent to 6.0 million tons. The
lower overall 1998/99 harvest is expected to result in
lower exports, though exports were forecast to still be
high, due to the high carryover of C-sugar from 1997/98.
Exports from the European Union are mostly in the form of
refined sugar. The largest EU sugar markets are generally
in the Middle East and Northern Africa. The 5 largest
markets in 1997/98 were Algeria, Syria, Israel, Iran, and
Russia. Imports in 1999/00 are forecast at 1.8 million
tons, unchanged from the current year. Imports into the
EU primarily consist of preferential imports, either
duty-free or with a reduced duty. Almost 70 percent of
the EU’s imports come from Mauritius, Swaziland,
Guyana, Jamaica, and Fiji.
Eastern Europe/Former Soviet Union
Poland
Poland’s sugar production in 1999/00
is forecast at 1.96 million metric tons, down 13 percent
from last year’s production, due to a decrease in
area planted. This production is still expected to exceed
domestic demand for sugar. The 1998/99 production
forecast was increased by 4 percent to 2.2 million tons.
In recent years, several Polish refineries have been
purchased and upgraded by West European companies and it
is expected that the Polish Government will sell several
more facilities this year.
Poland’s sugar exports in 1999/00 are
forecast at only 326,000 tons, 22 percent below the
revised 1998/99 forecast. One third of the 1999/00
exports are expected to be subsidized with WTO-allowed
export subsidies. Most of this sugar is shipped to Former
Soviet Union countries, mainly Uzbekistan, Russia, and
Belarus, which now face difficult economic problems.
Exports of sugar-containing foods to these countries is
expected to be significantly affected.
Russia
Sugar production in Russia in 1999/00 is
forecast at 1.1 million tons, a decrease of 12 percent
from the previous year’s output. Initial reports
indicate that cold weather conditions after the spring
planting have affected beets and some replanting will be
needed. Even with replantings, it is expected that the
1999/00 crop will not reach the level of the previous
year’s harvest. Adverse weather conditions in
1998/99 offset gains expected from the ruble devaluation
and high tariffs. The 1998/99 production is still
considerably lower than production in the early 1990's
because sugar beet farmers and processors are facing
serious financial difficulties and cannot afford to pay
for adequate fuel, seed, fertilizer, and other inputs.
Many farmers are forced to receive payments in white
sugar, rather than cash.
Russia’s imports in 1999/00 are
forecast at 3.7 million tons, a 6 percent increase over
the previous year’s imports. The imports for the
1998/99 season were reduced 4 percent from the previous
forecast, while the 1997/98 import forecast was increased
by 13 percent to 4.3 million tons.
A measure is currently being considered to
protect Russia’s troubled domestic sugar beet
producers for the 1999 production season. Sources state
this measure involves a seasonal tariff which would
increase the tariff rate to 45 percent for both raw and
white sugar and last from August 1 until November 31 for
raw sugar and January 31 for refined sugar. In response
to these potential restrictions, Russian imports in the
early part of the year have been coming at a faster than
expected pace.
Prior to the 1998 economic crisis, Russia
was importing record levels of sugar because of low world
prices and high domestic production costs. In response to
the high imports, the Russian government announced the
addition of a 74 and 20 percent tariff on imports of raw
and white sugar, respectively. Total duties at that time
were 78 percent for raw sugar and 48 percent for white
sugar. These duties were eliminated on January 1, 1999.
Measures that affect the market are expected to continue
at both the local and federal level until the overall
economic and sugar supply situations are stabilized.
Ukraine
Ukrainian sugar production will continue
to experience difficulties in the 1999/00 year, with
production forecast at only 1.8 million tons. Ukrainian
sugar producing areas were hit with below freezing
temperatures in May which will seriously impact sugar
beet production in 1999. Replanting will be necessary in
some areas, but it is unlikely that total production will
reach initial estimates.
The 1998/99 production forecast was
revised down to 2.0 million tons, the lowest Ukrainian
sugar output since 1953. Uncertain market conditions and
lack of inputs contributed to a smaller planted area,
while poor weather reduced yields. The Ukrainian sugar
beet industry continues to be plagued by costly and
inefficient production processes and processing
facilities. Despite the fact that sugar beet production
has not given positive returns in the past two years, the
Government of Ukraine still advises farmers to maintain
the present acreage planted. Continuing debt problems are
expected to plague the availability of herbicides,
pesticides, and also adequate amounts of seed. The
persistence of barter transactions throughout the
marketing chain is limiting the ability of the industry
to recover from it’s current financial difficulties.
As a result of continued low production,
exports are forecast at only 150,000 tons in 1999/00.
This is above the current year’s estimate, but
vastly below the 1.6 million tons exported in 1996/97.
Russia is the main importer of Ukrainian sugar, but in
1999/00 exports are expected to be limited to
government-to-government agreements using sugar as
repayment for resources supplied by Russia and other
Former Soviet Union countries. In general, Ukrainian
sugar has found it difficult to compete in the Russian
market because of high production costs compared with
exports from other suppliers. In 1998/99, Ukraine is
forecast to export 160,000 tons, 50 percent below the
previous forecast.
Asia
India
In India, sugar production follows a 4
to-5 year production cycle, where 2-3 good production
years are followed by 2-3 poor years. Following 2
consecutive years of record sugar production in 1994/95
and 1995/96, production declined 20 percent in 1996/97
and declined again in 1997/98. In 1998/99, sugar
production increased and is forecast to increase again in
1999/00. Despite delays in cane payments by mills, firm
domestic sugar prices are likely to encourage farmers to
expand area for this coming season.
Consumption in India grew by 6 percent and
3 percent in the past two years and is forecast to
increase by 2 percent in 1999/00. The government procures
40 percent of the sugar produced by the mills as a levy,
which is distributed to consumers at subsidized rates
through the government-operated Public Distribution
system. The mills can then market the remaining amount of
sugar in the open market. Imports of sugar have fallen
sharply from 1 million tons in 1997/98, to a forecast
400,000 tons in 1998/99 and are forecast at only 100,000
tons in 1999/00. Imports increased sharply in 1997/98
because subsidies for exports were halted, there was a
decline in sugar production, and consumption was higher
than expected. However, the recent tariff increase will
limit additional imports. The Government of India raised
the import duty on sugar from 20 percent to 27.5 percent
in its 1999/00 budget projections. Additionally, imported
sugar is subject to a countervailing duty, which is
reportedly equivalent to the local taxes applied on
domestic sugar. The increased duties have squeezed the
margins on imports of sugar, despite the current low
international price. India’s imports come primarily
from Brazil, Thailand, and Pakistan. Exports in the past
two years are now mostly under preferential quota levels
to the European Union and the United States.
Pakistan
Sugar production in Pakistan in 1999/00 is
forecast to increase 3 percent above the previous
year’s output. This increase is based on an expected
increase in cane production and better recovery levels.
Pakistan is forecast to export approximately the same
amount of sugar in 1999/00 as the revised 1998/99 volume.
In the 1998/99 marketing year,
Pakistan’s export forecast was decreased to 650,000
tons. Many industry observers expected Pakistan to have
difficulty exporting sugar, given their relatively high
production costs and the high level of competition in
world markets. To promote sugar exports, the Government
of Pakistan provides an export subsidy of approximately
$90 per metric ton to help export some of the accumulated
stocks.
Thailand
Thailand is forecast to produce 5.0
million tons of sugar in 1999/00, a decrease of 4 percent
from the 1998/99 output. This drop is the result of a
decrease in planted area, due to low prices and because
some planters did not receive adequate advance credit.
Additionally, some sugar cane which was reserved for
planting material was cut for delivery to sugar mills at
the end of the 1998/99 crushing season. Thailand’s
revised sugar production for 1998/99 is forecast at 5.2
million tons, an increase of 24 percent from the previous
forecast, due to unexpectedly good weather at the end of
the monsoon season. However, the Thai industry is still
facing a liquidity crisis that has affected mills and
banks ability to pre-finance growers, leading some to
switch to alternative crops and difficulties in acquiring
adequate inputs.
Sugar exports for the 1999/00 season are
forecast at 3.0 million tons, down slightly due to the
smaller production and the weak export market. Exports
for the 1998/99 season were revised up to 3.2 million
tons, 23 percent above the previous forecast. Japan,
South Korea, and Malaysia are the major buyers of Thai
raw sugar. Indonesia was the major purchaser of white and
refined sugar in 1998.
Oceania
Australia
Australian sugar production in 1999/00 is
forecast at 5.2 million tons, a 7 percent increase over
last year’s revised 4.87 million ton output. This
level of production reflects a rebound from last year,
but not the level of the 1996/97 record production. The
1998/99 season was the first decrease in production after
several years of consecutive record crops. The reduced
harvest reflected a smaller area harvested and a large
fall in the commercial cane sugar content of the
harvested cane. The effects of cyclone Rona and flooding
in the north Queensland area are the main contributing
factors to the lower-than-average sugar content in the
cane.
Australian sugar exports in 1999/00 are
forecast to rise slightly to 3.9 million tons, up 4
percent from last year’s shipments. Due to the lower
than expected production, Australian exports in 1998/99
were revised down to 3.56 million tons. Korea became the
top importer of Australian sugar in 1997/98, with Japan,
Malaysia, and Canada as the other most important export
destinations.
