November 9, 2023

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.

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