World Agricultural Supply And Demand Estimates – October 2023

Published online: Nov 10, 2023 News
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SUGAR: Mexico production for 2023/24 is reduced by 245,000 metric tons (MT) to 5.330 million. Mexico is currently experiencing widespread drought conditions. Growing areas most severely affected are in the western Pacific region and in San Luis Potosi.

Other states like Veracruz and Quintana Roo (important regions for the production of low polarity sugar) are not as severely affected. State-weighted April-October rainfall data indicate rainfall in cane growing regions is about 23 percent below normal. This level is lower than, but comparable to the situation in 2019, the next lowest annual level. The effects on yields vary depending on irrigation but will be lower overall.

Many factors besides rainfall enter into yield forecasting. USDA analysis suggests a national sugar yield of 61.3 MT/hectare, lower than the 62.9 in 2019 but higher than the 59.0 last year when fertilizer use was at a record low due to extremely high prices. With extremely high sugar prices, area harvested should remain at about 800,000 hectares. Sucrose recovery should be about 10.9 percent. Lower 2023/24 production implies changes in other components of Mexico supply and use.

Deliveries into the IMMEX program are decreased by 50,000 MT to 400,000, a level similar to last year when production was at its low 5.224 million MT level. The production of low polarity sugar for export to the U.S. market should be around the 70 percent of U.S. needs as determined by the DOC in September. Similar to last year, low polarity sugar is assumed to be about 75 percent of total exports to the United States, implying total exports at 1.051 million MT (1.026 million for the United States and 25,000 to other destinations).

Ending stocks are set at the level to meet delivery requirements into the beginning 2.5 months of 2024/25 before the start of the new campaign. Imports as the residual increase by 112,465 MT to 433,539. (Imports lower than this amount would require lower ending stocks than projected but would imply more imports in 2024/25 to meet delivery requirements.)

U.S. sugar supply for 2023/24 is increased by 12,345 short tons, raw value (STRV) on lower beginning stocks and imports offset by greater production. TRQ raw sugar imports are down 160,573 STRV due to the Philippines announcement that all production would be allocated for domestic uses and none for export.

Imports from Mexico are decreased 85,610 STRV on lower refined sugar slated for the U.S. market as explained above. These decreases are offset by a 100,000 STRV increase in projected high-tier tariff imports to 275,000. Like last month, 175,000 is projected to enter as refined sugar. Raw sugar imports are projected at 100,000 STRV. Prior to this WASDE high-tier tariff imports were only increased when there were raw sugar entries for the most recent month. The USDA now recognizes that high-tier tariff raw imports are an important source to meet raw sugar requirements under current market conditions.

Louisiana cane sugar production for 2023/24 is increased 48,947 STRV to 1.787 million mostly on a higher sugarcane yield forecast by NASS. Beet sugar production is increased 211,290 STRV to 5.363 million on higher sugarbeet yields forecast by NASS, an increase in recovery based on processors’ estimates of sucrose content, and adjustments made for early season production that cross between fiscal years.

There are no use changes. Ending stocks are projected at 1.569 million STRV, implying a stocks-to-use ratio of 12.39 percent, up 0.1 percentage points from last month

WHEAT: The outlook for 2023/24 U.S. wheat this month is for larger supplies, decreased domestic use, unchanged exports, and higher ending stocks. Supplies are raised on increased imports, up 10 million bushels to 145 million, on a strong pace to date and expectations for the rest of the marketing year.

Total domestic use is projected 4 million bushels lower to 1,155 million, all on a reduction in food use following the release of the latest NASS Flour Milling Products report. July-September wheat used in milling is the smallest for this quarter since at least 2014 when NASS began reporting this series. With no other changes to the U.S. balance sheet, projected ending stocks are raised 14 million bushels to 684 million. The projected 2023/24 season-average farm price is lowered $0.10 per bushel to $7.20 on lower expected prices for the remainder of the marketing year.

The global wheat outlook for 2023/24 is for increased supplies, fractionally lower consumption, less trade, and larger ending stocks. Supplies are projected up 0.6 million tons to 1,051.5 million as increased beginning stocks more than offset a decline in global production.

World production is lowered 1.5 million tons to 782.0 million on decreases to many countries including India, Argentina, Kazakhstan, the United Kingdom, and Brazil. The decrease for production in India is based on revised government estimates. In Argentina, production is forecast 1.5 million tons lower to 15.0 million as rains in October were too late to benefit the crop in Cordoba and Santa Fe. These production declines are partially offset by a 5.0-million-ton increase in the forecast for Russia, up to 90.0 million, based on near-final harvest data from the Ministry of Agriculture that indicates more harvested area and higher yields.

The global forecast for trade is lowered 1.3 million tons to 205.0 million, primarily on lower exports from Argentina, India, and Egypt that are only partly offset by an increase for Ukraine. Projected global ending stocks are raised 0.6 million tons to 258.7 million, with larger forecasts for Russia, China, and Argentina more than offsetting declines for India, Ukraine, and Brazil.