SUGAR: Mexico sugar supply for 2022/23 is increased by 125,000 metric tons (MT) to 6,388,512 on an increase in imports. Sugar stocks have decreased substantially in both May and June driving domestic prices to historically high levels and incentivizing high-tier tariff imports.
Official trade data showing sugar exports to Mexico are currently at 112,531 MT through May with 4 months to go in 2022/23. Relatively low Mexico production of low polarity sugar at 730,207 MT limits total exports under license to 1,043,153 under Suspension Agreement provisions that require low polarity exports to be at least 70 percent of the total. Exports apart from those under license are at 21,860 MT.
Ending stocks are unchanged providing enough sugar to supply domestic needs for 2.3 months. Deliveries into IMMEX are increased by 86,613 MT to 359,113. U.S. sugar supply for 2022/23 is raised by 148,289 short tons, raw value (STRV) on increased imports only partially offset by lower beet sugar production while use is lowered 25,000.
The resulting 173,289-STRV stock increase pushes the total to 2,013,900 for an ending stocks-to-use ratio of 15.84 percent. Re-export imports are increased by 75,000 STRV to 200,000 after a large inflow reported by Customs and Border Protection (CBP) in July. Greater sugar supply availability in Mexico results in an import increase of 43,175 STRV.
Calendar year TRQ imports for FTA countries are up 36,381 STRV on imports expected in the fourth quarter (the first quarter of 2023/24) entering earlier than expected. High-tier tariff imports are increased by 40,000 STRV to 390,000 on a large raw sugar entry of about 15,000 MT recorded by CBP in early August and on a further increase in the expected pace of refined sugar imports for the remainder of the fiscal year. Some reliable sources indicate that more raw sugar high-tier tariff imports are possible, but these will only be incorporated into the sugar after reported by CBP. The raw sugar TRQ shortfall is increased due to analysis made subsequent to USTR’s allocation of the TRQ after last month’s WASDE.
U.S. 2022/23 beet sugar production is estimated 10,929-STRV lower (5,135,692) on processors’ revised estimates of their beet sugar from sliced beets in the SMD. Use for 2022/23 is reduced by 25,000 STRV to 12,715,000 on an observed slowing of the pace of deliveries for human consumption. Deliveries for human consumption from domestic processors/refiners are running about 1 percent lower year over year. Beet deliveries continue to lag the previous year by about 6.5 to 7.0 percent while cane deliveries have been largely compensating, but at a declining rate since May.
The extent of the decrease is limited to 25,000 STRV after consideration of two factors. First, some sources indicate that the cane deliveries could regain their momentum for the remainder of the fiscal year. Second, refined high-tier tariff imports that augment direct consumption are forecast higher and may be presenting a lower-price alternative to deliveries of the domestically processed product.
U.S. sugar supply for 2023/24 is increased by 222,848 STRV on increased beginning stocks, production, and imports. Sugar production is projected 4,197 STRV higher. Compared with last month’s WASDE, NASS forecasts an unchanged sugarbeet area harvested but a larger sugarbeet yield of 30.93 tons/acre implying a beet sugar increase of 51,302 STRV to 5,073,061.
Recent dryness in Louisiana has resulted in lower processors’ forecasts of cane sugar production. It is now projected at 2,053,899 STRV, a reduction of 38,101. The Texas cane processor has lowered its forecast of sugar production by 9,004 STRV to a remarkably low total of 41,967. Access to water needed for irrigation is restricted and responsible for the poor production prospects. Imports are higher on a 75,000-STRV increase in re-export imports matching the increase in 2022/23 and a 10,000-STRV increase in high-tier tariff refined imports. Reallocation of expected FTA imports to 2022/23 reduces the total import increase to 45,362 STRV. There are no changes to use components this month. Ending stocks are projected at 1,942,108 STRV for stocks-to-use ratio of 15.24 percent.
WHEAT: The outlook for 2023/24 U.S. wheat this month is for decreased supplies, slightly lower domestic use, reduced exports, and higher stocks. Supplies are reduced as wheat production is forecast at 1,734 million bushels, down 5 million from last month as lower Other Spring and White wheat production is partially offset by increases for Hard Red Winter (HRW), Soft Red Winter, and Durum.
The all wheat yield is 45.8 bushels per acre, down 0.3 bushels from last month. Domestic use is lowered 3 million bushels, all on food use, based on the NASS Flour Millings Products report, issued August 1. Wheat exports are reduced 25 million bushels to 700 million, on the weak sales and shipment pace to date for HRW, where all the reduction is made.
Projected 2023/24 ending stocks are raised 23 million bushels to 615 million but remain well below the 5-year average of 846 million. The 2023/24 season-average farm price is unchanged at $7.50 per bushel. The global wheat outlook for 2023/24 is for reduced supplies, lower consumption, decreased trade, and lower stocks. Supplies are projected to decline 4.3 million tons to 1,061.7 million as reduced production for the EU, China, and Canada is only partially offset by increases for Ukraine and Kazakhstan.
The EU is lowered 3.0 million tons to 135.0 million, primarily due to reductions for Spain, Lithuania, and Romania. China is reduced 3.0 million tons to 137.0 million, based on the National Bureau of Statistics summer grain production forecast. Canada is decreased 2.0 million tons to 33.0 million on worsening drought conditions in the Prairie Provinces. Ukraine is increased 3.5 million tons to 21.0 million on higher area harvested and yields with the forecast yield the second highest on record. Kazakhstan is raised 1.0 million tons to 15.0 million on higher area reported by Kazakhstan’s Bureau of National Statistics. Global consumption is reduced 3.4 million tons to 796.1 million, mainly on lower feed and residual use for the EU and reduced food, seed, and industrial use by China. World trade is decreased 2.2 million tons to 209.4 million on reduced exports by Canada and the United States. Despite higher production, Ukraine’s exports are unchanged at 10.5 million tons with the expiration of the Black Sea Grain Initiative. Projected 2023/24 global ending stocks are lowered 0.9 million tons to 265.6 million, the lowest since 2015/16.