Sugar and Sweeteners Outlook: July 2023

(ED—For a deeper dive into this report and to see the associated charts, see the attached PDF.)

In the July 2023 World Agricultural Supply and Demand Estimates (WASDE) report, the U.S. sugar supply in 2022/23 is raised from last month on higher imports which offset the reduction in domestic sugar production, while total use is lowered on the observed slowdown in pace of sugar delivered for human consumption.

Thus, the 2022/23 ending stocks are increased and the resulting stocks-to-use ratio is 14.44 percent, up from last month’s 13.13 percent. The sugar supply in 2023/24 is raised on larger beginning stocks, domestic sugar production, and imports. The 2023/24 total use is lowered to match the downward adjustment made for 2022/23. Imports from Mexico are residually lowered in accordance with the sugar suspension agreements that set the 2023/24 ending stocks-to-use ratio to 13.5 percent.

Mexico’s 2022/23 campaign has concluded, and sugar production is adjusted downward to 5.224 million metric tons (MT), the lowest in the last decade. Imports by Mexico in 2022/23 are raised, which translates to an increase in U.S.-bound sugar exports; however, the increased export volume would still fall short of the March U.S. Needs calculation. For 2023/24, sugar production is expected to rebound to 5.9 million MT, unchanged from last month.

U.S. Outlook Summary:  U.S. Sugar Supply In 2022/23 And 2023/24 Increased

In the July 2023 WASDE report the U.S. sugar supply in 2022/23 is raised by 82,000 short tons, raw value (STRV) from last month to 14.581 million on higher imports offsetting the reduction in domestic sugar production (table 1). Total sugar use in 2022/23 is lowered by 75,000 STRV to 12.740 million on the observed slowdown in the delivery pace of sugar for food use.

Thus, the 2022/23 ending stocks are increased by 157,000 STRV to 1.841 million, and the resulting stocks-to-use ratio is 14.44 percent, up from last month’s 13.13 percent. Total sugar imports in 2022/23 are raised by 139,000 STRV from last month to 3.519 million as the combined increases in imports of World Trade Organization (WTO) tariff-rate quota (TRQ) raw sugar (after USDA’s July 10 announcement), high-tier sugar, and Mexican sugar offset the reduction in re-export program imports.

The sugar supply in 2023/24 is raised by 292,000 STRV from last month to 14.459 million on larger beginning stocks, domestic sugar production, and imports. Total use in 2023/24 is lowered to 12.740 million STRV to match the downward adjustment made for 2022/23. Most of the increase in imports is attributed to the additional specialty refined sugar TRQ after USDA announced the 231,485-STRV quota on July 5. Imports from Mexico are residually lowered by 90,000 STRV to 1.486 million in accordance with the sugar suspension agreements to set the 2023/24 ending stocks-to-use ratio to 13.5 percent.

Beet Sugar Production In 2022/23 Lowered As Campaign Winds Down

The fiscal year 2022/23 beet sugar production is reduced 24,000 STRV from last month to 5.147 million, which is comparable to 2021/22’s 5.155 million. With the crop year campaign concluding in July and beet slicing completed, except in California, the processors’ estimate of sliced beets (30.535 million short tons), sugar from beets sliced (4.690 million STRV), and sugar from molasses (360,000 STRV)–published in the USDA, Farm Service Agency (FSA) Sweetener Market Data (SMD) report–were incorporated this month (table 2).

Consequently, the 2022/23 crop year production is up by 15,000 STRV from last month to 5.050 million. Note, however, that the 39,000-STRV estimate for sugar produced from imported beets was zeroed out since this amount has already been accounted for within the processors’ estimates. Thus, the net result is a 24,000-STRV reduction in the crop year production to 5.050 million. With the early production estimate in August–September 2023 unchanged at 633,000 STRV, the fiscal year 2022/23 beet sugar production is also lowered by 24,000 STRV to 5.147 million.

Beet Sugar Production In 2023/24 Raised On Larger Acreage

The beet sugar production forecast in fiscal year 2023/24 is raised 72,000 STRV from last month to 5.022 million based on larger acreage offsetting lower yield expectation. This would be 125,000-STRV (2 percent) lower than the 2022/23 updated production of 5.147 million.

The June 30 National Agricultural Statistics Service (NASS) Acreage report included updates on planted area indicating that growers reportedly planted 1.129 million acres in the spring, which is about 18,000 more than they intended in the NASS March Prospective Plantings report. The 2 States in the Red River Valley (RRV) region saw the largest addition in planted areas – Minnesota at 11,000 acres and North Dakota with 6,000 (table 3). The additional acres were likely planted to offset the possibility of reduced sugarbeet yields due to weather events, such as snowstorms, that did not allow for timely field preparation. Planting typically occurs in late April to mid-May to allow the sugarbeets sufficient time to deposit sugar.

The NASS Acreage report also provided the initial forecast for the 2023/24 harvested acreage of 1.111 million acres, an increase of 27,000 acres from last month, reflecting a 98-percent planted-to-harvested ratio that is in line with recent trend.

The forecast for the national sugarbeet yield is lowered to 30.5 tons per acre from last month’s 30.8. The reduction is based on the necessity to plant the additional acres to compensate for potential yield reduction from the slow planting progress before the ideal mid-May period. Beet processors will conduct initial pre-harvest field samples in mid to late July, which will provide an objective insight of the crop. The first official USDA sugarbeet yield forecast will be released by NASS in its August Crop Production report. The forecast for sugarbeet shrink, sucrose recovery, and early season production are carried over from last month.

Sugarbeet Planted Acreage Has Been Mostly Flat

The 2023/24 forecast of 1.129 million of acreage planted is 31,000 lower (3 percent) than last year’s 1,160 million (table 4). The largest declines are expected in North Dakota (31,000 acres; 12 percent) and Montana (10,000 acres; 29 percent). The reduction is primarily due to the closure of the Sidney Sugars beet sugar processing plant that took in sugarbeets grown in western North Dakota and eastern Montana, as well as the overall difficult planting conditions in Montana.

Beet processors typically plant to utilize factory capacity given their expected yield. As seen in figure 1, the total acreage planted to sugarbeets in the United States has been mostly flat over the last decade as area expansion in some States is offset by reduction in others. In recent years, only the Upper Midwest and Far West sugarbeet growing regions saw area expansion. While area expanded in the Great Lakes region during 2020/21 and 2021/22, recent weather related challenges and competition from alternative crops took acreage away from sugarbeets. The Great Plains region’s planted area has been declining since 2014/15, and more so recently partly due to the downward trend in contracted acres for Sidney Sugars and the factory’s closure.