On March 11, the USDA published its monthly supply and demand estimates for FY2009 (ending September 30, 2009). While USDA projects ending stocks at the end of September to be nine percent of consumption, which is lower than usual, there is adequate sugar to meet customer needs.
The market is experiencing a unique situation, with Imperial Sugar’s Savannah refinery working to get back on line after last year’s explosion. Without their demand for raw sugar to refine, U.S. raw sugar prices are below the forfeiture range in all cane producing states.
In other words, raw prices are so low that every raw cane producer would be better off to forfeit their sugar to the government than to sell it in the marketplace.
However, once the Savannah refinery comes back on line sometime this year, raw prices should strengthen and refined prices will likely soften.
Any efforts by the Administration to add more sugar to the market would only exacerbate the problem in the raw market and depress refined sugar prices.
It should also be clear that with free trade with Mexico, we certainly do not need the level of stocks that has been traditionally held by our industry. At this point, there very well may be sugar produced in September from the 2009 crop to add to the supply for this year. We will get a report from USDA on March 31 as to the planting intentions for this year. With competing commodity prices down, refined sugar prices holding steady and adequate Roundup Ready seed available, we should see acreage rebounding to more normal levels.
The Obama Administration’s budget reform proposals for agriculture landed with a deafening thud on Capitol Hill. A broad spectrum of agricultural groups and members of Congress rallied to declare political war against proposals to cut benefits to producers with gross sales over $500,000.
Many budgets from previous administrations have been met with the same congressional response. Our industry is still waiting for the key Administration officials to be appointed so they can proceed with approving and sending forward the regulations for implementing the 2008 Farm Bill.
Negotiators from around the world will convene a negotiating session in Copenhagen, Denmark from December 7–18 in an attempt to forge a new climate change treaty. This would be the successor to the Kyoto Protocol that was adopted December 11, 1997 and put into effect on February 16, 2005.
The protocol established legally-binding commitments for the reduction of four greenhouse gases and two groups of gases. Under the agreement, industrialized countries agreed to reduce their collective greenhouse gas emissions by 5.2 percent compared to the year 1990. While 183 nations have ratified the treaty, the U.S. has not.
President Obama has pledged to cut U.S. emissions to 1990 levels by 2020, and 80 percent below that level by 2050.
This is an important issue to farmers, ranchers and anyone burning coal or natural gas in their processing plants (carbon tax or “cap and trade”).
Watch this issue closely, and we will provide updates on this as we go through the year.