Milling & Baking News - August 13, 2019 - 36

Industry Activities

U.S.D.A. seen maintaining sugar
stocks-to-use at 13.5% to 15.5%

ASHEVILLE, N.C. - The U.S. Department of Agriculture intends to
maintain the U.S. sugar supply within its recent target range, said Bill
Northey, U.S.D.A. undersecretary,
farm production and conservation,
at the annual International Sweetener
Symposium held Aug. 5 in Asheville.
"It's our desire to stay within a
13.5% to 15.5% stocks-to-use ratio,"
Mr. Northey said, indicating supply within that range will maintain a
"steady, solid market."
The U.S.D.A. and other government agencies initiated actions to
increase U.S. sugar imports (by reallocating some tariff rate quotas and
by increasing Mexico's export limit
to the United States) and to reassign domestic sugar marketing allotments earlier this summer to boost
the stocks-to-use ratio to 14.3% in
the July World Agricultural Supply
and Demand Estimates report from
12.4% in the June report. The actions occurred in a timely manner
for 2018-19 (the current marketing
year that ends Sept. 30) and set up
the market "to be in a good place"

for 2019-20, Mr. Northey said.
Meanwhile, sugar use was the
focus of a presentation by Michael
McConnell, agricultural economist,
Sugar and Sweeteners Market Outlook, Economic Research Service, of
the U.S.D.A., who said the growth
in sugar use has been
"trickling down" the
past couple of years.
"Sugar deliveries still
were increasing, but at
a declining rate," Mr.
McConnell said, with
recent growth at about
McConnell
0.5% annually.
He noted that demand for sugar
was inelastic - not depending on
price or consumer income. However,
he said consumer tastes, preferences
and dietary concerns were having
an impact, especially as they related
to food manufacturers' objectives to
change formulations to meet consumer preferences, including labeling.
Mr. McConnell also said the import
and export of sugar-containing products has had an effect on deliveries,
with larger net imports, adding that

Tighter global sugar supply seen
resulting from lower production
ASHEVILLE, N.C. - World sugar
supplies are expected to tighten as
production declines in 2019-20, but
large stocks and indications of declining demand growth may limit
recovery in a market battered by low
prices, said Jose Orive, executive director of the International Sugar Organization.
"World sugar prices have hit bottom, and signs are pointing to a recovery," Mr. Orive said Aug. 5 on a
panel at the 36th annual International

Sweetener Symposium, sponsored by
the American Sugar Alliance (A.S.A.).
That's good news for global farmers who have been struggling as raw
sugar futures dipped to near 10c a lb
in September 2018 - well below the
average cost of production. To survive
falling prices, many foreign governments have increased subsidies, which
has only increased overproduction.
Mr. Orive preliminarily forecast a
global sugar deficit of about 3.5 million tonnes in 2019-20, growing to

World sugar surplus/deficit
(supply minus use)

in million tonnes

10
8
6
4
2
0
-2
-4
-6
-8

**
***

2009

2010

2011

2012

Source: International Sugar Organization
36 / August 13, 2019

Milling & Baking News

2013 2014 2015 2016
(crop year beginning)

2017

*forecast

2018

2019

2020

**projection ***estimate

estimating actual sugar in such imports and exports was difficult.
He cited recent U.S.D.A. data that
showed an annual 0.57% decline in
total caloric sweetener deliveries over
the latest three-year period, compared
with an annual decline of 0.07% over
the past 15 years. Refined sugar deliveries were up 0.4% annually over
the past three years compared with
an annual increase of 1.58% over the
past 15 years. And, high-fructose corn
syrup deliveries declined 3.43% annually in the past three years and fell
2.38% annually over the 15-year period. The U.S. population, meanwhile,
increased 0.66% annually over the
past three years and increased 0.8%
annually over the past 15 years.
Short-term growth in the delivery of sugar has remained positive
(albeit by a small amount) and has
outperformed HFCS and the overall sweetener market, particularly
in the 10-year to 15-year period,
Mr. McConnell said.
"In more recent years, average
growth rates for total deliveries of
sugar have fallen and now lag behind population growth; hence, the
reduction in per capita deliveries," he
said in the July Sugar and Sweeteners
Outlook report. MBN
nearly 6 million tonnes in 2020-21,
compared with global surpluses of 2.1
million tonnes in 2018-19 and 9.7 million tonnes in 2017-18.
"The world is still suffering from
high accumulated stocks that will
need to be absorbed by the market before we can see any improvement on
price," Mr. Orive explained.
But he is optimistic because production from major sugar suppliers appears to be declining, which will let
stocks fall.
Brazil, the world's biggest exporter,
has seen production fall rapidly since
2017-18 with the majority of cane
now being used to produce ethanol.
Production by the second biggest
exporter, Thailand, is also down as
farmers switched to alternative crops.
Europe, another major producer and
exporter, also has devoted fewer acres
to beet production this year, although
the industry there is struggling after
production soared when government
controls were lifted in late 2017.
However, Mr. Orive warned that
there are factors that could quickly
change the outlook.
"Weather could provoke production variations, while consumption
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Milling & Baking News - August 13, 2019

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