Sugar and Sweeteners Outlook

Transcription

1 United States Department of Agriculture Electronic Outlook Report from the Economic Research Service SSS-239 Jan. 30, 2004 Sugar and Sweeteners Outlook Stephen Haley, and Nydia R. Suarez Central America Free Trade Agreement To Raise Imports From Central American Sugar Producers Contents U.S Sugar Special Article Contacts & Links Tables World PS&D World refined sugar prices World raw sugar prices U.S. raw sugar prices U.S. beet sugar prices U.S. retail sugar prices U.S. sugarcane area, yield, & production U.S. sugarbeet area, yield & production U.S. cane & beet sugar deliveries U.S. sugar, Supply & Use U.S. HFCS deliveries U.S. HFCS consumption Web Sites WASDE Sugar Briefing Room The next release is May 27, Approved by the World Agricultural Outlook Board. On December 17, 2003, the U.S. Trade Representative Robert Zoellick announced that a free trade agreement (FTA) had been reached with El Salvador, Guatemala, Honduras, and Nicaragua. The Central American Free Trade Agreement (CAFTA) provides for additional combined sugar and sugar-containing product tariff-rate quotas (TRQ) which total 85,000-90,000 metric tons in the first year. These TRQs are in addition to the four countries current combined World Trade Organization (WTO) access, which is 110,569 metric tons this year. The CAFTA quota will grow at an aggregate rate of about 2 percent a year. High-tier sugar tariffs will not be reduced over the term of the agreement. On August 13, 2003, the U.S. Department of Agriculture (USDA) set the Overall Allotment Quantity (OAQ) for fiscal year (FY) 2004 for sugar marketing allotments at 8,550,000 short tons, raw value (STRV). The USDA did not announce company allocations until September 30, at which time the Department announced that it was going to allocate only 96.5 percent of the OAQ, for a total of million STRV. When USDA made its decision in September, the raw cane sugar price averaged cents a pound for September and the refined beet sugar price averaged cents a pound. Since then, both sugar prices have decreased to or close to calculated minimum prices to avoid forfeiture of sugar loans to the Commodity Credit Corporation (CCC). As of January 22, 2004, (the release date of the summary of this report) the USDA had made no further announcement of changes to the OAQ. On January 12, 2004, the USDA released its latest supply and use estimates for FY 2003 and projections for FY 2004 in the World Agricultural Supply and Demand Estimates (WASDE) report. Sugar processors and millers project FY 2004 sugar production at million STRV. It is comprised of million STRV of beet sugar and million of raw cane sugar. Processors and millers estimate FY 2003 sugar production at million STRV, comprised of million STRV of beet sugar and million STRV of raw cane sugar.

2 On August 13, 2003, the USDA established the FY 2004 TRQ for sugar imports into the United States: 1,117,195 MTRV (1,231,497 STRV) for raw sugar; and 39,000 metric tons, raw value (MTRV) (42,990 STRV) for refined sugar. Total shortfall (or the amount of allocated TRQ not expected to be imported) is projected at 50,000 STRV. As of January 6, 2004, raw sugar FY 2004 TRQ imports have totaled 260,030 MTRV. This amount is 23.3 percent of the total allocation of million MTRV. Refined sugar FY 2004 TRQ imports have totaled 9,412 MTRV, or 24.1 percent of the refined sugar allocation. To date, only 366 MTRV of TRQ sugar from Mexico has entered into the United States. Other FY 2004 program sugar imports (the Refined Sugar Re-export Program, the Sugar-Containing Products Program, and the Polyhydric Alcohol Program) are projected to total 325,000 STRV. Non-program imports for FY 2004 are estimated at 35,000 STRV. The USDA projects FY 2004 exports at 160,000 STRV. These exports occur under the Refined Sugar Re-export Program. The USDA also projects that deliveries made to domestic food and beverage manufacturers under the Sugar-Containing Products Re-export Program will total 200,000 STRV in FY Starting with the November 2003 WASDE, the USDA now estimates/projects fiscal year sugar sales instead of deliveries for domestic food and beverage use. The USDA projects FY 2004 sugar sales at million STRV, an amount deemed compatible with the current OAQ level. Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

3 U.S. Sugar U.S. Sugar On January 12, 2004, the U.S. Department of Agriculture (USDA) released its latest supply and use estimates for FY 2003 and projections for FY 2004 in the World Agricultural Supply and Demand Estimates (WASDE) report. Unlike WASDEs that were released prior to November 2003, the current WASDE reports on estimated and projected sales of sugar for domestic use rather than deliveries of sugar for domestic use. The change was implemented in November because the provisions of the Farm Security and Rural Investment Act of 2002 (2002 Farm Act) require processors to report marketings in the form of sales or sugar title transfers instead of deliveries to the Farm Service Agency (FSA). The USDA s Interagency Commodity Estimates Committee (ICEC) for sugar made the decision to keep WASDE estimates and projections compatible with the data reported in FSA s Sweetener Market Data (SMD). Marketing Allotments On August 13, 2003, the USDA set the Overall Allotment Quantity (OAQ) for sugar marketing allotments at 8,550,000 short tons, raw value (STRV). (See Box 1 for a summary of USDA marketing allotment announcements for fiscal years (FY) 2003 and 2004.) The USDA did not announce company allocations until September 30, at which time the Department announced that it was going to allocate only 96.5 percent of the OAQ, for a total of million STRV. Statutory allocations between refined beet and raw cane sugar were made as follows (company detail is provided in table 1): Beet sugar: Cane sugar: Total million STRV million STRV million STRV The USDA made its decision after the release of the September 2003 WASDE. That WASDE projected ending stocks at million STRV, which implied an ending stocks-to-use ratio of 20.0 percent in the absence of allotments and a free stocks-to-use ratio of 17.4 percent with the originally-announced OAQ level. The original OAQ was established with an underlying free stocks-to-use ratio of 15.1 percent. By allocating 300,000 fewer tons, the USDA argued that the resulting free stocks-to-use ratio was closer to levels associated with a more balanced market. When USDA made its decision in September, the raw cane sugar price averaged cents a pound for September, and the refined beet sugar price averaged cents a pound. Since then, both sugar prices have decreased to or close to calculated minimum prices to avoid forfeiture of sugar loans to the Commodity Credit Corporation (CCC) (see tables 2 and 3). As of January 22, 2004, (the release date of the summary of this report) the USDA had made no further announcement of changes to the OAQ. Production The USDA s Interagency Commodity Estimates Committee (ICEC) for sugar no longer estimates production for the current year s crop or makes projections for sugar production for the out-year crop (except in May through July prior to the start of the new fiscal year). Rather, the USDA accepts the production estimates and projections provided by beet sugar processors and cane sugar millers to the FSA. Accordingly, processors and millers project FY 2004 sugar production at million STRV. It is comprised of million STRV of beet sugar and million of raw cane sugar. Processors and millers estimate FY 2003 sugar production at million STRV, comprised of million STRV of beet sugar and million STRV of raw cane sugar. Beet Sugar Production The National Agricultural Statistics Service (NASS) estimates sugarbeet area planted for FY 2004 at million acres, down about 4.4 percent from the previous year. Most of the decrease occurred in the Great Plains, where area planted decreased 38,300 acres, or 19 percent, compared with FY Planted area in the Upper Midwest (Minnesota and North Dakota) decreased by 19,000 acres (2.5 percent), and planted area in the Far West (Idaho, California, Oregon, and Washington State) decreased by 4,600 acres (1.7 percent). Planted area in the Great Lakes region (Michigan and Ohio) was the same as last year. Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

4 Sugar Allotment Developments August 27, 2002: The USDA established flexible marketing allotments for the 2002 crop year. The Overall Allotment Quantity (OAQ) was set at 7.7 million short tons, raw value (STRV). As provided in the 2002 Farm Act, the sector allotments were set: refined beet sugar, million STRV (54.35 percent of the OAQ); and raw cane sugar, million STRV. January 10, 2003: The USDA increased the OAQ for sugar marketing allotments by 500,000 STRV, to 8.2 million STRV. Resulting sector allotments were: million for beet sugar; and million STRV for cane sugar. January 10, 2003: The USDA announced that it was offering for sale its remaining unsold inventory of sugar held by the Commodity Credit Corporation (CCC). The sugar amounted to 24,000 STRV of refined sugar, and 160,901 STRV of raw sugar. January 15, 2003: 182,000 STRV of the beet sugar allotment was assigned to the CCC, subject to the results of an upcoming processor survey. May 13, 2003: The USDA increased the OAQ by 463,000 STRV, to million STRV. Resulting Sector allotments were: million STRV for beet sugar; and million STRV for canesugar. The USDA justified the increase on the basis of sugar prices well above the minimum levels to avoid forfeitures. May 19, 2003: After 77,641 STRV of beet sugar had been reassigned among processors, the USDA determined from the processor survey that beet processors were capable of fulfilling only million STRV of their allotment. Subsequently, the CCC was assigned 174,000 STRV of the beet sugar allotment for sale from its sugar inventory. The USDA also determined that cane processors were capable of fulfilling only million STRV of their allotment. The unfilled portion of 10,000 STRV was assigned to the CCC for sale from its remaining inventory. August 13, 2003: The USDA announced established the OAQ for the 2003 crop year at 8.55 million STRV. The beet sugar allotment was set at million STRV, and the cane sugar allotment was set at million STRV. At these announced levels, there were no surplus allotment quantities to the sugar tariff-rate quota (TRQ). September 30, 2003: The USDA allocated 96.5 percent of the 2003 crop year OAQ to beet and cane sugar processors. The USDA allocated the partial amount citing uncertainties surrounding total sugar use and beet and cane production forecasts. The USDA promised to release the remaining 300,000 STRV of the OAQ if and when market conditions warrant. The allocation is split among sectors as follows: million STRV to beet sugar processors, and million STRV to cane sugar processors. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

5 Table 1--Fiscal year 2004 beet and cane sugar allocations, by processor Initial allocation Reassignment of FY 2004 allocations Puerto Rican allotment to cane sector --- short tons, raw value --- Beet processors marketing allocations 1/ 4,483, ,483,875 Amalgamated Sugar Co. 934, ,192 American Crystal Sugar Co. 1,724, ,724,154 Holly Sugar Corp. 300, ,842 Michigan Sugar Co. 286, ,462 Minn-Dak Farmers Co-op. 279, ,737 Monitor Sugar Co. 164, ,149 Southern Minnesota Beet Sugar Co-op. 288, ,049 Western Sugar Co. 446, ,473 Wyoming Sugar Co. 59, ,816 Cane processors marketing allocations 2/ 3,766, ,766,125 Florida 1,874,073 3,013 1,877,086 Atlantic Sugar Assoc. 148, ,152 Growers Co-op. Of Florida 339, ,435 Okeelanta Corp. 381, ,926 Osceola Farms Co. 228, ,221 U.S. Sugar Corp. 775,105 1, ,351 Louisiana 1,409,688 2,266 1,411,954 Alma Plantation 75, ,891 Caire & Graugnard 3, ,303 Cajun Sugar Co-op. 100, ,796 Cora-Texas Mfg. Co. 126, ,804 Harry Laws & Co. 60, ,209 Iberia Sugar Co-op. 68, ,147 Jeanerette Sugar Co. 65, ,848 Lafourche Sugars Corp. 72, ,664 Louisiana Sugarcane Co-op. 87, ,624 Lula Westfield, LLC. 158, ,825 M.A. Patout & Sons 389, ,184 St. Mary Sugar Co-op. 95, ,873 South Louisiana Sugars Co-op. 105, ,789 Texas 157, ,617 Rio Grande Valley 157, ,617 Hawaii 318, ,469 Gay & Robinson, Inc. 68, ,253 Hawaiian Commercial & Sugar Co. 250, ,216 Puerto Rico 3/ 6,044-6,044 0 Agraso 3,876-3,876 0 Roig 2,169-2, / Processor allocations based on shares of domestic beet sugar production during the crop years / Cane state allotments and processor allocations established by assigning weights of 25 percent, 25 percent, and 50 percent to the 3-factor criteria: past marketings, processing capacity, and ability to market. 3/ Because Puerto Rico is forecast to have zero production in FY 2004, its allotment is reassigned to all other cane processors based on their respective shares of the cane allotment. Source: USDA. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

6 Table 2 -- Calculation of minimum raw sugar price to discourage forfeiture, 2003 Crop State Item Florida Hawaii Louisiana Texas Puerto Rico --- Cents per pound --- Loan rate Cost of loan redemption and marketing: Interest expense 1/ Transportation costs Location discounts Minimum price / Loan rate x Interest rate (2.5 %) x.75 (9-month loan). Source: USDA. Table 3--Calculation of minimum beet sugar price to discourage forfeiture, 2003 Crop Region MN & CO, NE, & West ND, MT, Item MI & OH East ND East WY & West WY OR & ID CA --- Cents per pound --- Loan rate Cost of loan redemption and marketing: Price increase to cover processor's interest expense 1/ Cash discount (2%) Minimum price (2.50 % int.) / [Loan rate x Interest rate (2.50 percent) x.75 (9-month loan)]/processor's share of selling price. Source: USDA. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

7 Very little of the acreage planted to sugarbeets was abandoned prior to harvest -- NASS estimates sugarbeet area harvested at million, and the ratio of area harvested to area planted is calculated at percent, the highest ratio since FY In spite of area reductions, NASS estimates an increase in sugarbeet production of million tons over FY 2003, to million tons. National sugarbeet yield is estimated at 22.7 tons per acre, an percent increase. Yield growth has been strong in the Upper Midwest at 10.4 percent (20.5 tons per acre), the Great Plains at 20.5 percent (23.0 tons per acre), the Far West at 12.8 percent (30.8 tons per acre), and also the Great Lakes at 5.7 percent (19.2 tons per acre). The beet processors forecast of FY 2004 beet sugar production at million STRV indicates a content/recovery per harvested acre of STRV, which would be a record high. Sugar production net of desugared molasses for September through November has amounted to million STRV from sliced beets totaling million tons. The implied recovery is percent, the highest amount calculated for any September-November period. Since FY 1995, the 3-month recovery relative to the September-August recovery has averaged 92.4 percent. If this average were realized for the 2003/04 year, the implied recovery net of sugar from molasses would be percent, or 312 pounds of sugar from each ton of sliced sugarbeets. Adding in sugar from desugared molasses (350,000 STRV or more) and making the adjustment to the October-September fiscal year, beet sugar production totaling above million STRV seems very likely. Cane Sugar Production FY 2004 sugar production is projected at million STRV, which is about 3 percent higher than FY NASS estimates a national sugarcane for sugar crop for the 2003 crop year at million tons from estimated acreage harvested at 996,800 acres. Sugarcane for sugar acreage is down in all producing areas from the previous crop year, and aggregate yield is also estimated down from last year by 0.2 ton, to 34.7 tons per acre. Florida cane sugar production is projected at million STRV, which, if realized, would be a record. NASS estimates Florida sugarcane acreage harvested for sugar at 421,000 acres, down 21,000 acres from last season. Growing conditions have generally been favorable -- yield is estimated at 39.5 tons per acre (the highest since FY 1999), implying production of sugarcane for sugar of million tons. Sugar per acre is projected at 5.14 tons, indicating high sucrose content and also excellent sugar recovery, at percent. With the 2003 harvest completed before the start of the new year, cane sugar millers in Louisiana project FY 2004 sugar production at million STRV. Dry conditions persisted through about 65 percent of the harvest season, but wet conditions set in and caused some deterioration in cane quality and subsequent sucrose recovery. NASS estimates Louisiana sugarcane acreage harvested for sugar at 450,000 acres, a decrease of 15,000 acres from last year. Yield is estimated at only 27.0 tons per acre, about 10 percent below the average of the last 5 years. Because replanting was hindered by extremely wet conditions in the fall of 2002, a larger proportion of the 2003 crop came from stubble than what would be considered normal, thereby reducing the yield. NASS also reports that excessive moisture in the fall of 2002 caused damage to the root system of some stubble fields, which also contributed to lower-than-expected yields. The cane sugar miller in Texas projects FY 2004 sugar production at 182,000 million STRV. NASS forecasts area harvested for sugar at 42,400 acres, 1,200 acres fewer than last year. NASS reports that growing conditions have been good but the yield forecast, at 37 tons per acre, is about 2 tons lower than otherwise because a high proportion of the crop is in its final year of the ratoon cycle. Sugarcane for sugar production is estimated at million tons, down about 136,000 tons from last year. Hawaiian cane sugar millers project FY 2004 sugar production at 276,000 STRV. Because Hawaiian production follows the calendar year, the bulk of the projected harvest season takes place in 2004 and no NASS sugarcane forecasts are available until August. It is reasonable to assume, however, that acreage and yield will be roughly similar to that for about 20,500 acres for sugarcane for sugar and a yield in the low- to mid-90 tons per acre. Trade On August 13, 2003, the USDA established the FY 2004 tariff-rate quota (TRQ) for imports of raw and Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

8 refined sugar into the United States. The FY 2004 raw sugar TRQ was set at 1,117,195 metric tons raw value (MTRV), or 1,231,497 STRV. This is the amount to which the United States is committed under the World Trade Organization (WTO) Uruguay Round Agreement on Agriculture (URAA). The USDA set the FY 2004 refined sugar TRQ at 39,000 MTRV, or 42,990 STRV, for which the sucrose content, by weight, in the dry state, must have a polarimeter reading of 99.5 degrees or more. This amount includes 22,000 MTRV, the minimum level to which the United States is committed under the URAA, and an additional 17,000 MTRV for specialty sugars. Total shortfall (or the amount of allocated TRQ not expected to be imported) is projected at 50,000 STRV; therefore, the total amount of TRQ sugar projected to enter the United States is million STRV. As of January 6, 2004, raw sugar FY 2004 TRQ imports have totaled 260,030 MTRV. This amount is 23.3 percent of the total allocation of million MTRV. Refined sugar FY 2004 TRQ imports have totaled 9,412 MTRV, or 24.1 percent of the refined sugar allocation. To date, only 366 MTRV of TRQ sugar from Mexico has entered into the United States. Other program sugar imports outside the sugar TRQ for FY 2004 are projected to total 325,000 STRV. Other USDA import programs include the Refined Sugar Re-export Program, the Sugar-Containing Products Program, and the Polyhydric Alcohol Program. Non-program imports for FY 2004 are estimated at 35,000 STRV. This total includes 25,000 STRV of sugar contained in molasses imported for the commercial extraction of refined sugar (HTS ), and high-tier tariff imports at 10,000 STRV. The USDA projects FY 2004 exports at 160,000 STRV. These exports occur under the Refined Sugar Re-export Program. The USDA also projects that deliveries made to domestic food and beverage manufacturers under the Sugar-Containing Products Re-export Program will total 200,000 STRV in FY Miscellaneous Adjustments The WASDE Miscellaneous category is comprised of four primary components: refining losses; inventory adjustments; differences in raw sugar imports between totals reported by cane refiners and the U.S. Customs Service; and sugar shipments less receipts among beet sugar processors, cane millers, and cane refiners. Sugar flows within these categories are typically hard to predict, although the expected value for any given year would typically be close to zero. Prior to FY 2003, the USDA did not project statistical adjustments in the Miscellaneous category. The practice has been to make an estimate in the November WASDE after data for the completed fiscal year had been reported to the USDA by sugar processors, millers, and refiners, and after TRQ import receipts had been reported by the U.S. Customs Service. As first reported in the January 2003 edition of this report, FY 2002 data for sugar shipments less receipts in the cane milling and refining sectors began to show a pattern in which a projection other than zero could be made for FY Cane millers shipments began exceeding cane refiners receipts in April 2002 and continued for an additional five consecutive months until September The cumulative total for FY 2002 net cane sector shipment less receipts was about 260,000 STRV. At the time, it was hypothesized that prior to marketing allotments, millers were shipping sugar to entities that were not required to report receipts to the USDA, and it was expected that this sugar would find its way to refiners during FY In fact, the net "shipments less receipts" level for October 2002, the first month of FY 2003, was -124,000 STRV. A conservative estimate of -200,000 STRV was made in the WASDE to account for continued rebalancing. Through July 2003, cane refiner net receipts exceeded cane miller net shipments by more than 178,000 STRV, an amount close to that predicted. After surveying cane sugar processors in the fall of 2003, the FSA determined the source of the imbalances in the cane sector shipments less receipts category. As reported above, due to the marketing allotment provisions in the 2002 Farm Act, processor reporting requirements switched from reporting physical shipments of sugar to reporting sales where title to sugar has been transferred but the sugar has not necessarily been delivered. Processors correctly reported their sales to refiners, but certain refiners were still reporting receipts under the pre-2002 Farm Act definition and hence, not reporting receipts into inventory until shipments were physically received. Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

9 When alerted to their misinterpretation of the new reporting requirements, refiners corrected their stocks accounting, and the imbalances largely disappeared. Sugar Sales and Deliveries The USDA projects FY 2004 sales for domestic food and beverage use at million STRV. This sales projection is consistent with the OAQ allocated at million STRV. If the total import projection of million STRV is added to the OAQ, the result represents the level of sales permitted under the 2002 Farm Act. From this total, one can subtract projections for exports (160,000 STRV) and for other deliveries such as the Products Re-Export Program (200,000 STRV) and non-edible alcohol and livestock feed (25,000 STRV) because these sales are excluded from marketing restrictions. The difference is the amount available for domestic sales for food and beverage, and it rounds to the million STRV in the WASDE. Prior to the 2002 Farm Act, beet sugar processors and cane sugar refiners were required to report to the FSA actual deliveries of sugar to end users. Because of the marketing allotment provisions in the 2002 Farm Act, requirements switched from reporting physical deliveries to reporting sales. The reporting change for beet sugar has masked the underlying level of sugar demand. In order to escape marketing restrictions faced in the next fiscal year, beet processors have an incentive to sell sugar at the end of the preceding year up to the level of that year s remaining, unfilled allotment even though delivery is not planned until after the start of the new year. (Before the start of marketing allotments in FY 2003, processors were only technically constrained by available supply in how much they could sell before allotments were put into place.) At the end of the fiscal year, a sugar processor holds in inventory sugar owned by itself and potentially by an entity to whom sugar title has passed but to whom delivery has not been made. In the fall of 2003, the FSA prepared a survey form which asked processors how much inventory they held for others -- this would be the quantity of sugar for which title has been transferred but still held at the processors facility or under its control, or held by a sugar dealer that is wholly-owned by the processors. Processors were to report this inventoried sugar as of September 30 for both 2002 and Survey results indicated that beet processors held 108,955 STRV as of September 30, 2002, and 409,815 STRV as of September 30, Based on the survey results, deliveries are estimated from the sales data to be million STRV for FY 2002 and million STRV for FY On a refined basis, per capita deliveries declined from 62.7 pounds to 60.0 pounds (top panel, table 4). An examination of delivery data to sugar end users shows that the decrease in deliveries to the cereal and baking industries, the confectionery industry, and the multiple use and other food end users are responsible for almost all of the decline in sugar deliveries. Deliveries to bakers and cereal manufacturers are 8.3 percent less than what they were in FY On the same basis, deliveries to confectioners are 13.5 percent less, and deliveries to multiple use and other food manufacturers are 21.5 percent less. Figure 1 shows time trends for each of these enduser delivery groupings. The trend includes a logged term that allows changes in trend to be more visible. 1 Deliveries to bakers and cereal manufacturers is the largest of the end use categories and have been declining since the spring of Trend deliveries to confectioners have been declining since the spring of 1997, and trend deliveries to multiple use and other food manufacturers have been declining since early Figure 1 Trends in domestic sugar deliveries, monthly basis, for selected end uses Short tons, actual weight 200, , ,000 Bakery and cereals 140, ,000 Confectionery 100,000 80,000 60,000 Multiple use 40,000 20, Source: USDA. 1 End user deliveries = c(1) + c(2)*(time index) + c(3)*(time index)**2 Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

10 Table 4--Estimated U.S. sugar deliveries and sugar in traded sugar-containing products 1/ Fiscal year Population Oct-Dec Jan-Mar Apr-June July-Sept FY total Per capita 1,000 short tons, raw value (STRV) pounds (refined value) Domestic sugar deliveries for food and beverage use ,280 2,046 2,172 2,432 8, ,277 2,121 2,265 2,533 9, ,260 2,105 2,311 2,542 9, ,379 2,191 2,355 2,519 9, ,430 2,143 2,401 2,591 9, ,443 2,233 2,428 2,568 9, ,458 2,208 2,553 2,655 9, ,580 2,318 2,484 2,611 9, ,564 2,370 2,486 2,580 10, / ,474 2,227 2,439 2,645 9, / ,497 2,183 2,360 2,429 9, Estimated sugar in imported sugar-containing products Estimated sugar in exported sugar-containing products Estimated sugar in USDA sugar-containing product re-export program Estimated sugar deliveries adjusted for trade in sugar-containing products ,283 2,050 2,185 2,465 8, ,268 2,116 2,271 2,563 9, ,272 2,110 2,326 2,574 9, ,394 2,205 2,374 2,546 9, ,446 2,189 2,416 2,630 9, ,465 2,258 2,466 2,631 9, ,505 2,285 2,620 2,727 10, ,624 2,364 2,529 2,653 10, ,591 2,419 2,542 2,646 10, ,533 2,323 2,556 2,777 10, ,610 2,303 2,497 2,575 9, / includes Puerto Rico. 2/ Assumes that 108,955 STRV of sugar sales in September 2002 were made by certain beet sugar processors for delivery in the first quarter of FY / Assumes that 409,815 STRV of sugar sales in September 2003 were made by certain beet sugar processors for delivery in the first and second quarters of FY Source: USDA (deliveries data), ERS (sugar in traded products) Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 22,

11 Growth in Sugar-Containing Products In addition to quarterly sugar deliveries for domestic food and beverage use, table 4 shows estimated sugar in traded sugar-containing products and total deliveries adjusted for sugar in traded products. FY 2003 deliveries for food and beverage use that includes sugar in traded products is estimated at million STRV. This total represents a decrease of 2.0 percent compared with FY 2002, which is higher than the 3.2 percent decrease for FY 2003 sugar deliveries for domestic food and beverage use alone. This reflects that domestic consumption of sugar in imported products has been increasing, but that the increase has not been large enough to offset the overall implied decline in sugar consumption. Figure 2 shows the per capita deliveries, adjusted and unadjusted for sugar in traded products. Adjusted FY 2003 sugar deliveries calculated at 63.3 pounds show a continuation of the downward trend since FY 1999 when per capita consumption was estimated at 67.1 pounds. The decrease from FY 2002 to FY 2003 of 2 pounds is the largest absolute decline seen since the decrease began in FY Figure 3 shows trends in adjusted and unadjusted total deliveries, similar to figure 1 in that the decline in trend is emphasized. As can be seen, the downward trend in domestic deliveries began in mid-2000, about 2 years before the trend in deliveries adjusted for sugar in traded products turned downward in Figure 2 Estimated fiscal year per capita sugar deliveries adjusted for trade in sugarcontaining products (SCP) Pounds Sugar deliveries incl. SCP Domestic sugar deliveries for food and beverage Source: USDA (sugar deliveries), Economic Research Service (sugar in products). Figure 3 Trend in sugar deliveries, quarterly basis STRV 2,600 2,500 2,400 2,300 2,200 2,100 2,000 QDD, adj. for sugar in traded products Quality domestic deliveries (QDD) 1, Source: USDA (sugar deliveries), Economic Research Service (sugar in products). Sugar Deliveries in FY 2004 As mentioned, sugar deliveries are no longer projected in the WASDE. Projected domestic sugar sales are shown, but sugar sales are potentially a function of the OAQ level if the OAQ has been set at a rate higher than underlying sugar demand. The Economic Research Service (ERS) maintains monthly regression forecasting models for each of the sugar end use categories that are reported by the FSA in their Sweetener Market Data. By using indicator variables for those periods where sales and deliveries are expected to differ the most (September - November, for 2002 and 2003), it is possible to test whether the sales in those months were significantly different than what would have been forecast otherwise. 2 For example, September deliveries in 2002 and 2003 for "wholesalers, jobbers, and sugar dealers" and "other uses" were much higher than normal. It is hypothesized that sales in these categories were later converted into deliveries to other end users. An indication of this phenomenon would be lower than anticipated sales to those end users in the months coming immediately after the 2 An indicator variable representing a particular month is assigned a value of 1 corresponding to the observation for that month; for all other observed time periods, a value of zero is assigned for the variable. Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

12 start of the new fiscal year. The hypothesis is tested for all end user categories for September through November in 2002 and 2003, and results are shown in table 5. Table 5 shows sales significantly exceeding predicted deliveries in September of both years: 118,234 tons in 2002 and 297,982 tons in The 2002 total is close to the survey result of about 109,000 STRV, but the 2003 total is some 90,000 STRV less than the 410,000 reported by processors. In the 2 months after September 2002, there is not much indication of deliveries exceeding sales, except in the "other use" category. It may be that the effect in any one end user category was too small to be discerned statistically. In 2003, however, the deliveries effect (indicated by a negative coefficient) is in evidence in October and November in deliveries to bakers and cereal manufacturers, confectioners, multiple use and other food manufacturers, and wholesalers. Table 6 shows an estimate for FY 2002 and FY 2003 of sugar deliveries by end user category, and also a projection for FY The results of table 5 -- estimated excess of sales over deliveries for September, and estimated deficit of sales below deliveries for October and November are factored into the FSA deliveries data. Then a forecast is made for the remaining 10 months of FY 2004 in each end use category. The results are summed across the months and presented in the table. As can be seen, the forecast for FY 2004 is midway between the estimated deliveries in FY 2002 and FY When converted from actual weight to raw value, and after subtracting out deliveries estimated elsewhere for livestock feed and USDA s Products Re-export Program, deliveries for domestic and food and beverages are projected at million STRV. This would be the number relevant for OAQ determination. Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

13 Table 5--Sugar sales less estimated deliveries, by enduse category Category Sept Oct Nov Sept Oct Nov short tons, actual weight Industrial use Bakery and cereal ,206-51,157-31,215 Confectionery ,982-18,257 Ice cream and dairy 5, , Beverage 3, Canned, processed Multiple uses ,747-16,766 Non-food 3, Sub-total 12, , ,850-66,238 Non-industrial use Wholesale 23, ,799-43,262-23,219 Retail grocery Other 82,908-12, , Hotels and restuarants Sub-total 106,070-12, ,776-43,262-23,219 Total 118,234-12, , ,113-89, = not statistically different from zero. Source: Economic Research Service. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

14 Table 6--Estimated and projected sugar deliveries, by end user category FY2002 FY2003 FY2004 Short tons, actual weight Industrial use Bakery and cereal 2,139,557 2,060,396 2,106,868 Confectionery 1,222,912 1,149,940 1,213,244 Ice cream and dairy 513, , ,538 Beverage 178, , ,793 Canned, processed 305, , ,840 Multiple uses 707, , ,678 Non-food 90,667 95,954 91,892 Sub-total 5,157,505 5,013,800 5,160,852 Non-industrial use Hotels and restaurants 54,744 48,582 73,298 Wholesale 2,396,946 2,421,510 2,438,007 Retail grocery 1,321,434 1,295,015 1,268,057 Government 61,345 19,002 23,239 Other 248, , ,424 Sub-total 4,083,258 4,015,658 4,036,026 Total 9,240,763 9,029,458 9,196,878 Total (STRV) 1/ 9,974,000 9,675,000 9,854,390 Deliveries for domestic food and beverage (STRV) 2/ 9,785,355 9,468,216 9,629,390 1/ STRV = short tons, raw value. 2/ Total deliveries less non-food items and deliveries for the products re-export program. Source: Economic Research Service. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

15 Central America Free Trade Agreement On December 17, 2003, the U.S. Trade Representative Robert Zoellick announced that a free trade agreement (FTA) had been reached with El Salvador, Guatemala, Honduras, and Nicaragua. 1 The Central American Free Trade Agreement (CAFTA) provides for additional combined sugar and sugar-containing product tariff-rate quotas (TRQ) which total 85,000-90,000 metric tons in the first year. These TRQs are in addition to the four countries current combined World Trade Organization (WTO) access, which is 110,569 metric tons this year. The CAFTA quota will grow at an aggregate rate of about 2 percent a year. High-tier sugar tariffs will not be reduced over the term of the agreement in the same way specified in the North American Free Trade Agreement (NAFTA). With these provisions the Administration considers it has reached a deal which should be acceptable to the domestic sugar industry 2 The U.S. Trade Representative s office has also announced that negotiations are set to begin with the Dominican Republic, and will seek to bring that country into the CAFTA negotiations, prior to Congressional action on legislation to approve and implement the agreement. The Dominican Republic s allocation of the U.S. raw sugar TRQ is the highest of any of the countries that have an allocation, currently 185,335 metric tons or about 67 percent more than the summed allocations of all four of the CAFTA countries. Apart from the CAFTA, the United States has announced its intention to begin FTA negotiations with Panama, Colombia, and Peru. Outside the Americas, the United States is working to conclude FTAs with Australia and Morocco. Negotiations continue with 5 countries in southern Africa - Botswana, Lesotho, Namibia, South Africa, and Swaziland. Additionally, the United States has announced its intention to negotiate FTAs with Bahrain and Thailand. Collectively, these countries have sugar TRQ allocations of 242,200 metric tons. 1 Although Costa Rica, with the strongest economy in the region, walked out of the talks on the last day over demands to open its service sector, it has since reconsidered its position. On January 6, Costa Rica resumed talks with U.S. officials and is expected to join the other four countries in the CAFTA soon. Costa Rica s TRQ allocation is currently 15,796 metric tons. 2 The American Sugar Alliance (ASA) strongly disagrees, as it sees CAFTA as a template, to be followed rapidly by FTA s with Australia, and the Dominican Republic due to be completed in January and April, respectively. If these countries also get an equivalent quota increase, the ASA considers that the sugar program would become unworkable. They have pledged to work to defeat passage of CAFTA in its present form. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

16 Special Article Updating U.S. Sugar Price Forecasting: Implications of Marketing Allotments and Increased U.S. Sugar Stocks Volatility Stephen Haley Agricultural Economist Market and Trade Economics Division Economic Research Service This article has four objectives. First, it seeks to address the concern about forecasting U.S. sugar prices in the third quarter of the calendar year, i.e., July-September. This is related specifically to the requirement to avoid sugar loan forfeitures under the 2002 Farm Act. The second objective is to establish how the marketing loan program reporting requirements have changed the meaning of ending stocks-to-use for price forecasting. The third objective is to show how increased ending fiscal year sugar stocks volatility has affected price forecasting since The fourth objective is to estimate a set of relationships that gives increased statistical soundness to the concept of reasonable ending year sugar stocks. Sugar Price Support in the 2002 Farm Act The sugar title of the Farm Security and Rural Investment Act of 2002 ("2002 Farm Act") provides for the operation of the sugar price support program. The key component is the U.S. sugar loan rate program that allows the U.S. Department of Agriculture (USDA) to make loans available to processors of domestically grown sugarcane at a rate of 18 cents per pound and to processors of domestically grown sugarbeets at the rate of 22.9 cents per pound for refined sugar. Loans are taken for a maximum term of 9 months and must be liquidated along with interest charges by the end of the fiscal year in which the loan was made. The loans are nonrecourse, which means that when the loan matures, the USDA s Commodity Credit Corporation (CCC) must accept sugar pledged as collateral as payment in full in lieu of cash repayment of the loan, at the discretion of the processor. By forfeiting the sugar, the processor effectively withdraws sugar from the market, thereby reducing excess sugar supply and helping to support the market price of sugar. The 2002 Farm Act requires the USDA, to the maximum extent possible, to operate the U.S. sugar loan program at no cost to the Federal Government. Specifically, this provision means that the USDA must operate the program in order to avoid the forfeiture of sugar to the CCC. In order to discourage forfeiture of nonrecourse loans, the sugar price at the time of loan repayment, typically in the period between July and September, must be high enough to cover the loan principal plus interest expenses and other costs. In order to comply with the no-cost provision, the 2002 Farm Act requires the USDA to establish flexible marketing allotments for sugar. 1 The overall quantity of sugar to be allotted for the October/September crop year is determined by subtracting the sum of million short tons, raw value (STRV) and carry-in stocks of sugar (including CCC inventory) from the USDA s estimate of sugar consumption and "reasonable" carryover stocks at the end of the crop year. The overall allotment quantity is divided between refined beet sugar at percent of the overall quantity and raw cane sugar at percent of the overall quantity. The USDA is required to adjust allotment quantities during the year, if necessary, to avoid the forfeiture of sugar to the CCC. Reasonable Carryover Stocks and Sugar Price Forecasting USDA s determination of the Overall Allotment Quantity (OAQ) would be relatively straight-forward 1 Although not technically part of the 2002 Farm Act, the sugar tariff-rate quota (TRQ) is a policy tool intended to limit supplies of imported sugar in order to assure reasonable prices for both consumers and producers. However, U.S. commitments for importer access under international trade agreements, especially the Uruguay Round Agreement on Agriculture, have limited the effectiveness of the sugar TRQ in insuring adequate sugar supplies at prices high enough to avoid forfeiture of sugar to the CCC. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

17 if the notion of "reasonable carryover stocks" were a well-understood and applied concept as it was before FY In the period after FY 1996, USDA officials established the sugar TRQ by incorporating USDA s World Agriculture Supply and Demand Estimates (WASDE) September projections for supply and utilization into a formula that targeted the ending-year stocks-to-use ratio at 14.5 percent. After setting the level of the sugar TRQ, USDA officials allocated about 70 percent of the TRQ among eligible exporting countries and reserved the remainder to be allocated in equal amounts in January, March, and May if WASDE projections in each of those months indicated ending year stocks-to-use at 15.5 percent or lower at the established TRQ level, less any amounts not previously allocated. USDA s justification for specific stocks-to-use targets was based on historical precedent that interpreted adequate supplies of sugar in terms of ending stocks-to-use ratios of 15.5 percent or less. However, in its review of USDA s administration of the sugar TRQ program, the General Accounting Office (GAO) (1999) found that by using the 14.5 and 15.5 percent stocks-to-use targets, the USDA was keeping domestic sugar prices between 2 and 3 cents higher than necessary to avoid loan forfeitures to the CCC. With the implementation of flexible marketing allotments in FY 2003, USDA asked for sugar industry and user comments on administration of the program. Both groups framed their comments on desirable ending stocks in terms of targeted ending year stocks-to-use ratios. Producer groups argued for targeted levels at or below 14.5 percent. Sugar user groups argued for targeted levels at 16.5 percent and higher. User groups were in effect arguing that reasonable ending stocks should be defined in terms of sugar prices at or only slightly above that level to avoid forfeiture, in essential agreement with GAO recommendations. The USDA has not publicly framed its OAQ determination for FY 2003 or 2004 in terms of specific ending stocks-to-use ratios. Nonetheless, projected ending stocks-to-use continues its role as a closely watched indicator of the likelihood of sugar loan forfeitures. Knowledge of statistical relationships between sugar prices and stocks and use will continue to be a necessary element for successful program management as policymakers react to unfolding market developments. Change in Processors Reporting to the USDA The confidence that USDA and others may have placed in the relationship between ending stocks and sugar prices in the period where most forfeitures are likely to occur has been challenged in two areas. The first is a change in what processors are required to report to the USDA as sugar marketings. Prior to the 2002 Farm Act, beet sugar processors were required to report actual deliveries of sugar to endusers, and cane sugar processors were required to report actual shipments of raw cane sugar to refineries. Because of the marketing allotment provisions in the 2002 Farm Act, requirements switched from reporting physical deliveries to reporting sales where title to sugar has been transferred but the sugar has not necessarily been delivered until some future time period. Initially, a reporting problem arose in both the cane and beet sugar sectors. The cane problem was remedied when the USDA made sure that sugar refiners were recording sugar sold to them as stocks as soon as title formally passed to them. Because refiners stocks are counted in overall ending stocks, the switch from processors shipments and refiners receipts to offsetting sales transactions did not affect the calculation of ending stocks. The reporting change for beet sugar masks the underlying level of demand. In order to escape marketing restrictions faced in the next fiscal year, beet processors have an incentive to sell sugar at the end of the preceding year up to the level of that year s remaining, unfilled allotment even though delivery is not planned until after the start of the new year. In other words, sugar sales potentially become a function of the ending year s established OAQ if the OAQ has been set at a level higher than underlying demand. At the end of the fiscal year, a sugar processor holds in inventory sugar owned by itself and by its customer. The customer could be an enduser or a marketing intermediary. In either case, these entities are not required to report their sugar stocks to the USDA. The USDA recognized processors sales in excess of deliveries when end of year data for FY 2002 became available in November Because marketing allotments were not put into place until FY 2003, Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

18 processors were only technically constrained by available supply in how much they cou ld sell before the start of FY 2003, with the intention of actual delivery in FY On the basis of statistical analysis, the USDA estimated processors end-of-year inventory held by others at 200,000 STRV. 2 The USDA rightly determined that similar activity would re-emerge at the end of FY It prepared a survey form which asked processors how much inventory they held for others -- this would be the quantity of sugar for which title has been transferred but still held at the processors facility or under its control, or held by a sugar dealer that is wholly-owned by the processors. Processors were to report this inventoried sugar as of September 30 for both 2002 and Survey results indicated that beet processors held 108,955 STRV as of September 30, 2002, and 409,815 STRV as of September 30, 2003, (USDA, 2003). Table A1 shows sugar allotment and processors sales and deliveries data for FY The final OAQ adjustment was made on May 13, 2003, raising the OAQ to million STRV, with the statutory split between beet and cane processors as shown. On May 19, after 77,641 STRV of beet sugar had been reassigned among processors, the USDA determined from another processor survey that beet processors were capable of fulfilling only million STRV of their allotment. Subsequently, the CCC was assigned 174,000 STRV of the beet sugar allotment for sale from its sugar inventory. The USDA also determined that cane processors were capable of fulfilling only million STRV of their allotment. The unfilled portion of 10,000 STRV was assigned to the CCC for sale from its remaining inventory. Beet processors completed the year selling million STRV which is short of their allotment by 28,000 STRV, or 0.6 percent. The extent of their actual sugar deliveries was much less, estimated to be million STRV. Table A2 shows the WASDE and an alternative version for FY 2002 through FY The alternative differs in that the former practice of reporting processors deliveries for domestic food and beverage use is substituted for the current practice of 2 See "Program-Induced Behavior Affects the Data," in Sugar and Sweeteners Outlook, SSS-237, May 2003, pp 8-9. reporting sales. Deliveries in FY 2002 are 108,955 STRV less than reported sales. Deliveries in FY 2003 are 300,860 STRV less (that is, 409,815 STRV to be delivered in FY 2004 less the 108,955 STRV sold in FY 2002 but presumably delivered in FY 2003). The FY 2004 sales projection is based on the current level of the allocated OAQ for FY 2004 (8.250 million STRV). The FY 2004 projection of deliveries for food and beverage use happens to be the same as projected sales, which would, at least for this example, indicate flat deliveries growth from FY 2003 to FY The alternative series include stocks held by the processors regardless of who has title to the sugar. The resulting ending year stocks-to-use ratios are, therefore, higher: by 1.2 percentage points for FY 2002, 4.5 percentage points for FY 2003, and 4.1 percentage points for FY Processors Reporting Change and Price Forecasting Price forecasting can be a valuable tool in sugar program management. In accordance with the 2002 Farm Act, the USDA acts to minimize the possibility of sugar loan forfeitures through careful attention to management of sugar marketing allotments. The USDA can facilitate prices at or higher than the minimum price to avoid forfeitures by making accurate projections of supply and utilization, by correlating projected stocks-to-use with the probability of prices below forfeiture levels, and by using projections and analysis in establishing or modifying the OAQ. Ending stocks-to-use ratios used in analysis have come from USDA s supply and utilization series as published in the WASDE. The question raised by the switch from reporting processors deliveries to reporting sales for the WASDE is whether the stocks-to-use ratios based on sales produces as reliable a set of results regarding price forecasting as those ratios based on deliveries. Prior to FY 2002, the issue was not relevant because there was no reported distinction between sales and deliveries. The series since FY 2002, as explained above, have diverged. The most direct way to analyze the issue is to estimate the relationship between prices and ending stocks-to-use rates defined alternatively and then compare forecasting characteristics. Table A3 presents data on raw cane and refined beet sugar Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

19 Table A1--Sugar allotments in fiscal year 2003 Items Refined beet sugar Raw cane sugar 1,000 short tons, raw value Allotment Assignment to the Com modity Credit Corp. Processors' allotments Processors' sales Processors' deliveries Processors' shipments Source: USDA. Table A2--U.S. sugar production, supply, and distribution: December 2003 WASDE and an alternative 1/ 2/ December 2003 WASDE Alternative Item 2001/ / / / / /04 Beginning stocks 2,180 1,426 1,305 2,180 1,535 1,714 Total production 7,900 8,378 8,969 7,900 8,378 8,969 Total imports 1,535 1,713 1,584 1,535 1,713 1,584 Total supply 11,615 11,517 11,858 11,615 11,626 12,267 0 Total exports Miscellaneous Total deliveries 10,082 9,976 9,675 9,974 9,675 9,675 Domestic food & beverage 9,894 9,769 9,450 9,785 9,468 9,450 Other deliveries Total use 10,189 10,213 9,835 10,080 9,912 9,835 Ending stocks 1,426 1,305 2,023 1,535 1,714 2,432 Stocks-to use ratio / WASDE = World Agricultural Supply and Demand Estimates report. 2/ Alternative version adjusts the WASDE version for estimated sugar deliveries made by sugar processors in September 2002 and 2003 in anticipation of marketing allotments. Source: USDA for WASDE, and ERS for Alternative WASDE. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

20 prices and ending stocks-to-use ratios. (For FY , the table shows the ending stocks-to-use based on deliveries.) Table A4 shows a comparison of results for each ending stocks-to-use series for raw cane sugar prices. The equation with the ending stocks-to-use ratio based on deliveries has better estimation statistics. The adjusted R2 measure (an indicator of the percentage of variance in the price series explained by the variance of the ending stocks-to-use) is higher: compared with The standard error of the deliveries-based equation is lower (0.626 compared with 0.769). The Schwarz criterion (a measure of the 1-step out-of-sample prediction of prediction error variance) is lower for deliveries-based ending stocks-to-use series: compared with The t-statistics on the individual coefficient estimates (an indicator of how much the coefficients are significantly different from zero) are higher for the deliveries-based equation. Better estimation properties are clearly associated with the ending stocks calculated from deliveries rather than sales, at least for the price of raw cane sugar. Table A5 shows a comparison of results for each ending stocks-to-use series for refined beet sugar prices. As with the cane price equation, the equation with the ending stocks-to-use ratio based on deliveries has better estimation statistics. The adjusted R2 is higher: compared with 0.606; the standard error of the equation is lower: compared with 1.470; the Schwarz criterion is lower: compared with 3.969; and the coefficient t-statistics are higher (except on the production ratio variable). As in the other equation, the absolute value of the ending stocks-to-use coefficient is higher for the deliveries-based series. Reliability of Sugar Price Forecasts Over Time Another consideration relevant for price forecasting, along with implications for program management, is how estimated relationships among variables have been changing over time. Table 6 shows regression results for the deliveries-based stocks-to-use series for , , and The first two data columns reproduce the results from table 5; that is, the results over These results can be compared with the equation estimated over the first half of the period, specifically Although the coefficient values are not far different ( versus ), the amount of explained price error variance (the adjusted R2), has gone down from to The equation estimated over (results in the fifth and sixth data columns) show similar coefficient values as the other equations but the adjusted R2 is only Also, the Durbin-Watson statistic is high at 3.018, indicating that serial correlation may be affecting the reliability of the coefficient estimates. In fact, when serial correlation is corrected in the final equation shown, the slope coefficient jumps to , with the adjusted R2 rising to with the addition of two variables that capture first and second order auto-regressive characteristics. In table A3, the price and stocks data are organized such that the first half of the observations from 1982 through 1992 are in a separate column from the second half. Also shown is the absolute value of the percentage change in ending year stocks-to-use from one year to the next. Variable averages and standard deviations are shown in the bottom two data rows. Comparing prices and ending stocks-to-use ratios across the two time periods does not show a lot of difference in the averages or variance. What is different, however, is the absolute value of the yearly percentage change in stocks-to-use. In the first half, it averaged 11.7 percent, with a standard deviation of 5.9. In the second half, it averaged 15.1 percent, with a standard deviation of Although statistically, it is not clear that the averages have changed much, it is the case that they have exhibited more variability since The increase in the variability of yearly changes may help contribute to reduced confidence in parameter estimates. Table A7 shows four regression equations for observations over The first equation (the "unrestricted model") is the same as the deliveries-based equation seen in tables A5 and A6. The next equation includes as an explanatory variable the absolute value of the percentage change in stocks-to-use. As indicated, the raw sugar price is significantly inversely associated with the absolute change variable, the adjusted R2 rises to 0.771, and the value of the Schwarz criterion decreases. Nonetheless, better estimations are obtained by 3 The Bartlett test statistic for the equality of variances is 3.428, indicating that the probability of erroneously rejecting hypothesis of variance equality is only 6.4 percent. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

21 Table A3--Third-quarter sugar prices, ending fiscal year stocks-to-use ratios and absolute value of percentage change from previous year Fiscal year Prices Ending FY Absolute value Fiscal year Prices Ending FY Absolute value Raw sugar 1/ Beet sugar 2/ stocks-to-use 3/ of change in Raw sugar Beet sugar stocks-to-use of change in stocks-to-use stocks-to-use cents per pound percent cents per pound percent Average Std. deviation / Nearby No. 14 NY contract, July - September average, New York Board of Trade. 2/ Midwest, low end of range, July - September, Milling and Baking News. 3/ includes stocks for others held by processors in 2002 and 2003, USDA. Table A4--Estimated relation between third-quarter raw cane sugar price and alternative ending stocks-to-use ratios Model with unadjusted ending Model with ending stocks-to-use stocks-to-use ratio adjusted for processors' inventory held for others Variables Coeff. T-statistic Coeff. T-statistic Constant Ending stocks-touse ratio Summary statistics: Adjusted R Standard error Schwarz criterion 1/ Durbin-Watson Observation period: FY / Measure of the 1-step out-of-sample prediction error variance--a smaller value from an equation indicates that the equation has better forecasting ability relative to equations with higher values. Source: Economic Research Service. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

22 Table A5--Estimated relation between third-quarter refined beet sugar price and ending stocks-to-use ratios Model with ending stocks-to-use Model with unadjusted ending adjusted for processors' inventory stocks-to-use ratio held for others Variables Coeff. T-statistic Coeff. T-statistic Constant Index variable for FY 1994 and Ending stocks-touse ratio Ratio of beet sugar production to sum of total production and TRQ/quota imports First-order autoregressive coeff Summary statistics: Adjusted R Standard error Schwarz criterion 1/ Durbin-Watson Observation period: FY / Measure of the 1-step out-of-sample prediction error variance--a smaller value for an equation indicates that the equation has better forecasting ability relative to equations with higher values. Source: Economic Research Service. Table A6--Estimated relation between third-quarter raw cane sugar price and adjusted ending stocks-to-use ratios, differing time periods Model with observations: Model with observations: Model with observations: Model with observations: , with correction for autocorrelation Variables Coeff. T-statistic Coeff. T-statistic Coeff. T-statistic Coeff. T-statistic Constant Ending stocks-touse ratio First-order autoregressive coeff Second-order auto- -- regressive coeff Summary statistics: -- Adjusted R Standard error Schwarz criterion 1/ Durbin-Watson / Measure of the 1-step out-of-sample prediction error variance--a smaller value from an equation indicates that the equation has better forecasting ability relative to equations with higher values. Source: Economic Research Service. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

23 Table A7--Estimated relationships between third-quarter raw sugar price and adjusted ending fiscal year stocks-to-use ratio, fiscal years Unrestricted Stock variability Adjusted coefficient Restricted coefficient model 1/ model 2/ model 3/ model 4/ Variables (Coeff.)/ summary statistics Coeff. value T-statistic Coeff. value T-statistic Coeff. value T-statistic Coeff. value T-statistic Constant - c(1) Ending stocks-touse ratio (STU) - c(2) Absolute value of percentage change in STU - c(3) Adjustment coefficient for: 1992 (D92) - c(4) 5/ (D94) - c(5) /2000 (D9900) - c(6) (D02) - c(7) Equal coeff. restriction - c(8) Adjusted R Standard error Schwarz criterion 6/ Durbin-Watson Observation period: FY / Price_3q = c(1) + c(2)*stu. 2/ Price_3q = c(1) + c(2)*stu + c(3)*abs(%stu). 3/ Price_3q = c(1) + c(2)*stu + c(4)*d92*stu + c(5)*d94*stu + c(6)*d9900*stu + c(7)*d02*stu. 4/ Price_3q = c(1) + c(2)*stu + c(8)*d92*stu + c(8)*d94*stu + c(8)*d9900*stu + c(8)*d02*stu, restriction - c(4) = c(5) = c(6) = c(7) = c(8). 5/ e.g., for 1992, D92 = 1, otherwise, D(92) = 0. 6/ Measure of the 1-step out-of-sample prediction error variance--a smaller value from an equation indicates that the equation has better forecasting ability relative to equations with higher values. Source: Economic Research Service. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

24 excluding the absolute change variable and substituting adjustment coefficients for the following years: 1992, 1994, , and The adjusted R2 rises to and the Schwarz criterion is lower than the first two equations in the table. 4 The coefficients on the year-based adjustment variables are all close to each other; in fact, the difference between any and all of the coefficient values are not statistically not different from zero. This leads to the last equation that shows the largest adjusted R2 (0.927), lowest standard error (0.307), and the lowest Schwarz criterion value (0.754). The equation can be interpreted as indicating that in most years, the raw sugar price changes by for a 1-percent increase in the ending stocks-to-use ratio; however, for certain years (1992, 1994, , and 2002), the change might jump by an additional to A question remains as to what happens in these years to make the stocks-to-use relationship more negative. The fiscal years 1994, 2000, and 2002 saw the largest absolute value changes in ending stocks-to-use ratios since 1992 (22.7, 37.1, and 27.3 percent, respectively). The decline in the raw sugar price during (a low of cents in February 2000) started in August 1999 (right before the end of FY 1999) in anticipation of large supplies that would in the next year cause the ending stocks-to-use ratio to go to 21.9 percent. The only year not associated with a large percent change or the anticipation of one is If one regresses the absolute change variable on indicator variables for 1994, 2000, and 2002 (e.g., for 2002 indicator, a value of 1 is assigned to that variable for 2002 and zero for all other years), plus a constant and first-order auto-regressive term, over 80 percent of the error variance is accounted for (that is, adjusted R2 over 0.80). It would seem, therefore, that greater fluctuations in ending stocks-to-use ratios have contributed to larger estimates of inverse trade-offs between ending stocks-to-use ratios and the raw sugar price. Implications An example of how the research in this article is applied is easily shown. As explained earlier, the 2002 Farm Act directs the USDA to calculate the OAQ by adding reasonable ending stocks to the USDA s estimate of sugar consumption and then subtracting the sum of beginning sugar stocks (including any stocks held by the CCC) and million STRV. The relevant equation from table 7 is: *(ending stocks-to-use)=raw sugar price, with a standard error (SE) of The minimum price to avoid forfeiture in Louisiana (the highest minimum price in all cane producing States) is cents per pound. If risk is to be accounted for, one would want to select a price somewhat above the minimum price to avoid forfeiture in order to exclude the minimum price in the confidence interval surrounding the desired, targeted price level. 5 The necessary information from the equation is the SE of Multiplying this number by and adding the product to the cents is cents. Inserting this number into the equation produces a desired ending stocks-to-use ratio of percent. Results produced by this study imply better statistical relationships between price and the stocks-to-use ratio if all stocks are included, that is, stocks owned by processors and also those owned by others but still held by the processors. This result also implies using estimated sugar deliveries rather than expected sugar sales. Using the data from table 2 as an illustrative example, total use is million STRV. Multiplying this number by produces a reasonable stocks level of million STRV. Adding this number to projected deliveries of 9.45 million STRV and then subtracting the sum of beginning stocks of million STRV and million STRV produces an OAQ of 7.69 million STRV. 4 If one includes in this equation the absolute change variable (not shown), its coefficient has low statistical significance, indicating collinearity between the absolute change variable and adjusting coefficients. This relationship is pursued below. 5 Regression theory implies the projected price from the equation is an average with errors distributed normally about it. The prediction errors have an implied standard deviation equal to the SE of the equation, that is, Multiplying the SE by and adding the result to the minimum forfeiture price provides a pricing target that excludes the minimum price from an interval about the target with a degree of statistical confidence of 95 percent. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

25 References U.S. Department of Agriculture. "Program-Induced Behavior Affects the Data," in Sugar and Sweeteners Outlook, Economic Research Service. SSS-237, May U.S. general Accounting Office. Sugar Program: Changing the Method for Setting Import Quotas Could Reduce Cost to Users. GAO/RCED , July U.S. Department of Agriculture. Sweetener Market Data: September 2003 Data. Farm Service Agency. Vol. 12, Issue 12, December, Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

26 Table 7--World production, supply, and distribution, centrifugal sugar Country Beginning Production Imports Total Exports Domestic Ending stocks supply consumption stocks 1,000 metric tons, raw value North America United States 1/ 1999/2000 1,487 8,203 1,484 11, ,049 2, /2001 2,013 7,956 1,443 11, ,306 1, /2002 1,978 7,174 1,393 10, ,127 1, /2003 1,294 7,600 1,554 10, ,135 1, /2004 1,184 8,070 1,437 10, ,778 1,768 Canada 1999/ ,207 1, , / ,211 1, , / ,239 1, , / ,190 1, , / ,350 1, , Mexico 1999/ , , ,576 1, /2001 1,063 5, , ,623 1, /2002 1,548 5, , ,184 1, /2003 1,172 5, , ,227 1, /2004 1,193 5, , ,345 1,349 Total North America 1999/2000 2,543 13,255 2,728 18, ,890 3, /2001 3,193 13,297 2,697 19, ,171 3, /2002 3,720 12,431 2,684 18, ,565 2, /2003 2,719 12,883 2,809 18, ,713 2, /2004 2,505 13,632 2,890 19, ,398 3,261 Caribbean: Cuba 1999/ , ,548 3, / , ,938 2, / , ,938 3, / , ,128 1, / , ,078 1, Dominican Republic 1999/ / / / / Other Caribbean 1999/ / / / / Total Caribbean 1999/ , ,012 3,980 1, / , ,361 3,497 1, / , ,307 3,601 1, / , ,461 1,820 1, / , ,394 1,720 1, continued-- Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

27 Table 7--World production, supply, and distribution, centrifugal sugar Country Beginning Production Imports Total Exports Domestic Ending stocks supply consumption stocks 1,000 metric tons, raw value Central America: Guatemala 1999/ , ,687 1, / , ,728 1, / , ,047 1, / , ,134 1, / , ,169 1, Other Central America 1999/ , , / , , / , , , / , , , / , , , Total Central America 1999/ , ,871 1,959 1, / , ,963 2,117 1, / , ,159 2,091 1, / , ,285 2,141 1, / , ,353 2,203 1, South America: Brazil 1999/2000 1,010 20, ,110 11,300 9, / , ,810 7,700 9, / , ,260 11,600 9, / , ,020 14,000 9, / , ,050 14,250 10, Colombia 1999/ , , , / , , , / , ,569 1,085 1, / , ,680 1,264 1, / , ,743 1,265 1, Argentina 1999/ , , , / , , , / , , , / , , , / , , , Other South America 1999/ , , , / , , ,518 1, /2002 1,101 3, , ,585 1, /2003 1,413 3, , ,632 1, /2004 1,486 3, , ,750 1,374 Total South America 1999/2000 2,368 27, ,417 12,881 15,533 2, /2001 2,003 24, ,969 9,279 15,543 2, /2002 2,147 27, ,070 13,318 15,940 1, /2003 1,812 31, ,116 16,051 16,232 1, /2004 1,833 32, ,270 16,356 16,655 2,259 continued-- Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

28 Table 7--World production, supply, and distribution, centrifugal sugar Country Beginning Production Imports Total Exports Domestic Ending stocks supply consumption stocks 1,000 metric tons, raw value Western Europe 2/ European Union 1999/2000 3,107 19,498 1,786 24,391 6,138 14,523 3, /2001 3,730 18,519 1,839 24,088 6,607 14,061 3, /2002 3,420 16,153 2,025 21,598 4,793 14,088 2, /2003 2,717 18,675 2,150 23,542 5,600 14,361 3, /2004 3,581 17,132 1,900 22,613 4,900 14,358 3,355 Other Western Europe 1999/ / / / / Total Western Europe 1999/2000 3,264 19,688 2,175 25,127 6,138 15,072 3, /2001 3,917 18,757 2,229 24,903 6,614 14,620 3, /2002 3,669 16,343 2,495 22,507 4,797 14,655 3, /2003 3,055 18,911 2,491 24,457 5,607 14,938 3, /2004 3,912 17,341 2,265 23,518 4,905 14,935 3,678 Eastern Europe: 3/ Poland 1999/ , , , / , , , / , , , / , , , / , , , Russian Federation 1999/2000 2,650 1,500 5,170 9, ,130 3, /2001 3,000 1,550 5,650 10, ,840 3, /2002 3,100 1,630 4,850 9, ,040 2, /2003 2,130 1,580 3,900 7, ,300 1, /2004 1,050 1,800 3,800 6, , Ukraine 1999/ , , , / , , , / , , , / ,550 1,400 3, , / ,400 1,050 2, , Other Eastern Europe 1999/2000 1,182 2,387 2,678 6, ,244 1, /2001 1,452 1,939 2,763 6, ,279 1, /2002 1,295 2,253 2,949 6, ,226 1, /2003 1,449 2,138 3,312 6, ,323 1, /2004 1,622 2,223 2,782 6, ,338 1,458 Total Eastern Europe 1999/2000 4,453 7,569 8,232 20,254 1,289 14,047 4, /2001 4,918 7,364 8,862 21,144 1,285 14,952 4, /2002 4,907 7,347 8,146 20,400 1,383 15,014 4, /2003 4,003 7,462 8,697 20,162 1,998 14,701 3, /2004 3,463 7,488 7,687 18,638 1,776 14,274 2,588 continued-- Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

29 Table 7--World production, supply, and distribution, centrifugal sugar Country Beginning Production Imports Total Exports Domestic Ending stocks supply consumption stocks 1,000 metric tons, raw value Africa 4/ South Africa; Republic of 1999/ , ,400 1,410 1, / , ,685 1,580 1, / , ,260 1,235 1, / , ,650 1,565 1, / , ,270 1,300 1, Other Africa 1999/2000 1,464 5,018 4,530 11,012 1,541 7,862 1, /2001 1,609 5,301 4,688 11,598 1,865 7,954 1, /2002 1,779 5,481 4,593 11,853 1,803 8,268 1, /2003 1,782 5,321 5,189 12,292 1,705 8,593 1, /2004 1,994 5,481 5,444 12,919 1,725 8,795 2,399 Total Africa 1999/2000 2,024 7,703 4,685 14,412 2,951 9,322 2, /2001 2,139 8,196 4,948 15,283 3,445 9,604 2, /2002 2,234 8,023 4,856 15,113 3,038 9,843 2, /2003 2,232 8,252 5,458 15,942 3,270 10,188 2, /2004 2,484 8,008 5,697 16,189 3,025 10,395 2,769 Middle East: 5/ Egypt 1999/ , , , / , , , / ,408 1,102 2, , / ,340 1,100 2, , / , , , Turkey 1999/2000 1,098 2, , , / , , , / , , , / , , , / , , , Other Middle East 1999/ ,189 6, , / ,057 5,225 6, , / ,065 5,444 7,290 1,003 5, / ,241 6,214 8,215 1,329 5,700 1, /2004 1,186 1,502 5,597 8,285 1,352 5,873 1,060 Total Middle East 1999/2000 2,244 4,647 5,482 12,373 1,634 9,219 1, /2001 1,520 5,213 6,173 12,906 1,742 9,236 1, /2002 1,928 4,269 6,547 12,744 1,433 9,667 1, /2003 1,644 4,926 7,315 13,885 1,445 9,850 2, /2004 2,590 4,742 6,497 13,829 1,602 10,058 2,169 continued-- Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

30 Table 7--World production, supply, and distribution, centrifugal sugar Country Beginning Production Imports Total Exports Domestic Ending stocks supply consumption stocks 1,000 metric tons, raw value Asia, Oceania 6/ 7/ India 1999/2000 7,374 20, , ,296 10, / ,710 20, ,190 1,360 17,845 11, / ,985 20, ,560 1,130 19,760 11, / ,670 22, ,790 1,950 20,750 11, / ,090 19, ,970 1,300 21,500 8,170 China; Peoples Republic of 1999/2000 2,548 7, , ,476 1, /2001 1,851 6,849 1,083 9, ,650 1, /2002 1,004 8,305 1,375 10, , / , , ,916 2, /2004 2,070 10, , ,263 2,347 Thailand 1999/ , ,405 4,147 1, / , ,715 3,394 1, / , ,968 4,157 1, / , ,282 5,100 1,900 1, /2004 1,282 7, ,972 5,800 1,990 1,182 Australia 1999/ , ,636 4, / , ,685 3, / , ,301 3,594 1, / , ,883 4,220 1, / , ,582 3,893 1, continued-- Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

31 Table 7--World production, supply, and distribution, centrifugal sugar Country Beginning Production Imports Total Exports Domestic Ending stocks supply consumption stocks 1,000 metric tons, raw value Asia, Oceania 6/ 7/ Pakistan 1999/ , , , / ,648 1,100 3, , / , , , / , , , / , , , Indonesia 1999/ ,690 1,949 4, ,200 1, /2001 1,330 1,800 1,591 4, ,300 1, /2002 1,415 1,725 1,600 4, ,350 1, /2003 1,385 1,755 1,650 4, ,450 1, /2004 1,340 1,900 1,850 5, ,600 1,490 Philippines 1999/ , , , / , , , / , , , / , , , / , , , Japan 1999/ ,650 2, , / ,486 2, , / ,407 2, , / ,466 2, , / ,402 2, , Other Asia and Oceania 1999/2000 1,563 2,409 6,243 10,215 1,327 7,495 1, /2001 1,393 2,157 6,970 10,520 1,368 7,884 1, /2002 1,268 2,411 7,094 10,773 1,518 8,012 1, /2003 1,243 2,482 7,742 11,467 1,550 8,126 1, /2004 1,791 2,281 7,385 11,457 1,568 8,222 1,667 Total Asia, Oceania 1999/ ,430 48,022 11,532 73,984 10,173 46,484 17, / ,327 45,730 12,501 75,558 9,411 48,158 17, / ,989 50,161 11,722 79,872 11,016 51,186 17, / ,670 56,622 11,483 85,775 13,199 53,136 19, / ,440 54,032 11,227 84,699 13,152 54,605 16,942 Unrecorded 8/ 1999/2000 5, / /2002 3, /2003 6, /2004 7,870 World Total 9/ 1999/ , ,531 36, ,976 41, ,395 36, / , ,495 38, ,274 37, ,164 37, / , ,888 37, ,007 41, ,790 33, / , ,336 39, ,494 45, ,725 37, / , ,635 37, ,917 45, ,311 34,499 1/ The U.S. PS&D estimates conform to those released in the World Agricultural Supply and Demand Estimates (WASDE) with the WASDE "miscellaneous" category allocated to domestic consumption. All data are presented on a fiscal year (October - September) basis. The U.S. PS&D includes Puerto Rico. 2/ Includes French overseas departments of Reunion, Guadeloupe, and Martinique. Imports and exports include sugar-containing products. 3/ Includes Traditional Eastern European countries, Hungary, Czech Republic, Slovakia, Balkans, Baltics, Armenia, and Georgia. 4/ Includes all of Continental Africa except Egypt. 5/ Includes Bahrain, Kuwait, Oman, Qatar, and the United Arab Emirates. 6/ Indian data include production of khandsari sugar, a native type, semi-white centrifugal sugar. Estimated output of khandsari sugar in thousands (raw value equivalent) is as follows: 1998/99-779; 1999/ ; 2000/01-683; 2001/02-714; 2002/03-683; 2003/ / Includes Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. 8/ The "Unrecorded" category is a balancing mechanism to equalize world exports and imports. It is assumed there is a certain quantity of trade that will not be recorded, with the result that imports and exports will differ by a certain amount. 9/ Total distribution includes unrecorded imports. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

32 Table 8--World refined sugar price, monthly, quarterly, and by calendar and fiscal year 1/ Year Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. : 1st Q. 2nd Q. 3rd Q. 4th Q. : Calendar Fiscal Cents per pound : : : : : : : : : : : : : : : : : : : : : / Contract No. 5, London Daily Price, for refined sugar, f.o.b. Europe, spot. Source: LIFFE, London. Table 9--World raw sugar price, monthly, quarterly, and by calendar and fiscal year 1/ Year Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. : 1st Q. 2nd Q. 3rd Q. 4th Q. : Calendar Fiscal Cents per pound : : : : : : : : : : : : : : : : : : : : : : : : : : / Contract No. 11-f.o.b. stowed Caribbean port, including Brazil, bulk spot price. Source: Coffee, Sugar & Cocoa Exchange, Inc. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

33 Table 10--U.S. raw sugar price, duty fee paid, New York, monthly, quarterly, and by calendar and fiscal year 1/ Year Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. : 1st Q. 2nd Q. 3rd Q. 4th Q. : Calendar Fiscal Cents per pound : : : : : : : : : : : : : : : : : : : : : / Contract No. 14, duty fee paid New York. Average of nearest futures month for which an entire month of prices will be available. For example, April 2001's price average of cents is the average of closes for the July 2001 futures during the month of April since there was not a full month of May 2001 futures in April (the May 2001 futures expired April 10th, July 2001 became the nearest futures, so July 2001 was used for the entire month of April). Source: New York Board of Trade ( Table 11--U.S. wholesale refined beet sugar price, Midwest markets, monthly, quarterly, and by calendar and fiscal year Year Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. : 1st Q. 2nd Q. 3rd Q. 4th Q. : Calendar Fiscal Cents per pound : : : : : : : : : : : : : : : : : : : : : : Source: Milling & Baking News. Simple average of the lower end of the range of quotations for days in that month. Quotations are weekly. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

34 Table 12--U.S. retail refined sugar price, monthly, quarterly, and by calendar and fiscal year Year Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. 1st Q. 2nd Q. 3rd Q. 4th Q. Calendar Fiscal Cents per pound : : : : : : : : : : : : : : : : : : : : : : : Source: Bureau of Labor Statistics. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

35 Table 13--U.S. sugarcane: area, yield, production, sugar output, recovery rate, and sugar yield per acre, crop years 1/ Crop Area Percent Sugarcane Sugarcane Sugar Recovery Sugar year Total for For area for yield for production production rate yield per seed sugar seed sugar for sugar acre 2/ 1,000 acres Percent Tons/acre 1,000 1,000 tons, Percent Short tons, short tons raw value raw value Florida 1991/ ,937 1, / ,143 1, / ,493 1, / ,213 1, / ,428 1, / ,803 1, / ,535 1, / ,083 2, / ,505 1, / ,350 2, / ,620 1, / ,929 2, / ,630 2, Hawaii , , , , , , , , , , , , , Louisiana 1991/ , / , / , / ,589 1, / ,421 1, / ,347 1, / ,716 1, / ,880 1, / ,225 1, / ,811 1, / ,340 1, / ,160 1, / ,150 1, continued-- Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

36 Table 13--U.S. sugarcane: area, yield, production, sugar output, recovery rate, and sugar yield per acre, crop years 1/ Crop Area Percent Sugarcane Sugarcane Sugar Recovery Sugar year Total for For area for yield for production production rate yield per seed sugar seed sugar for sugar acre 2/ 1,000 acres Percent Tons/acre 1,000 1,000 tons, Percent Short tons, short tons raw value raw value Texas 1991/ , / , / , / , / , / / / , / / , / , / , / , Total cane 1991/ ,960 3, / ,873 3, / ,635 3, / ,404 3, / ,137 3, / ,687 3, / ,003 3, / ,743 3, / ,577 4, /01 1, ,291 4, /02 1, ,775 3, /03 1, ,903 3, / , = Not available. 1/ Crop year is October/September for Florida, Louisiana, and Texas. Crop year for Hawaii is the calendar year. 2/ Yield per acre harvested for sugar only (excludes sugarcane for seed). 3/ Forecast. Sources: "Crop Production," National Agricultural Statistics Service; "Sweetener Market Data," Farm Service Agency, USDA; and the World Agricultural Supply and Demand Estimates report, USDA. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

37 Table 14--U.S. sugarbeet area, yield, and production Crop Yield per Sugar yield per Year Planted Harvested Sugarbeets harvested Sugar Recovery harvested acre rate acre ---1,000 acres--- 1,000 short tons Tons 1,000 tons Percent Tons ,427 1,387 28, , ,437 1,412 29, , ,438 1,409 26, , ,476 1,443 31, , ,445 1,420 28, , ,368 1,323 26, , ,459 1,428 29, , ,498 1,451 32, , ,561 1,527 33, , ,564 1,373 32, , ,371 1,243 25, , ,427 1,361 27, , ,365 1,348 30, , NA = not available; 1/ Forecast Source: USDA Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

38 Table 15--U.S. cane and beet sugar deliveries, monthly, quarterly, and by fiscal and calendar year Year Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. : 1st Q. 2nd Q. 3rd Q. 4th Q. : Fiscal Calendar 1,000 short tons, raw value U.S. beet sugar for domestic consumption: : ,075 1,055 : 3,902 3, : ,097 1,008 : 4,134 4, : 995 1,047 1, : 4,254 4, : 989 1,066 1,300 1,131 : 4,279 4, : 1,018 1, : 4,139 3, : ,152 1,009 : 3,903 3, : 1,002 1,087 1,190 1,034 : 4,288 4, : 1,018 1,124 1,244 1,151 : 4,419 4, : 1,045 1,118 1,152 1,119 : 4,465 4, : 1,113 1,183 1,272 1,112 : 4,686 4, ,012 1,047 1,223 1,010 4,394 4, ,041 1,506 4,518 Cane sugar for domestic consumption: : 1,069 1,236 1,303 1,200 : 4,820 4, : 1,042 1,161 1,332 1,246 : 4,734 4, : 1,112 1,209 1,310 1,298 : 4,877 4, : 1,104 1,243 1,236 1,226 : 4,880 4, : 1,172 1,349 1,515 1,504 : 5,262 5, : 1,274 1,427 1,437 1,416 : 5,641 5, : 1,230 1,339 1,374 1,404 : 5,358 5, : 1,186 1,429 1,407 1,396 : 5,427 5, : 1,272 1,365 1,456 1,414 : 5,490 5, : 1,251 1,302 1,282 1,338 : 5,248 5, ,208 1,373 1,507 1,320 5,424 5, ,216 1,317 1,324 5,177 Importers direct consumption: : : : : : : : : : : : : : : : : : : : : Total sugar for domestic consumption: : 1,985 2,178 2,390 2,273 : 8,772 8, : 2,039 2,172 2,432 2,277 : 8,916 8, : 2,121 2,265 2,532 2,260 : 9,195 9, : 2,105 2,311 2,542 2,379 : 9,218 9, : 2,191 2,355 2,519 2,430 : 9,445 9, : 2,143 2,401 2,591 2,443 : 9,565 9, : 2,233 2,428 2,565 2,458 : 9,669 9, : 2,208 2,553 2,655 2,580 : 9,873 9, : 2,318 2,484 2,611 2,564 : 9,993 9, : 2,370 2,486 2,580 2,474 : 10,000 9, , ,227 2,439 2,754 2,388 9,894 9, , ,183 2,360 2,839 9,769 continued- - Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

39 Table 15--U.S. cane and beet sugar deliveries, monthly, quarterly, and by fiscal and calendar year Year Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. : 1st Q. 2nd Q. 3rd Q. 4th Q. : Fiscal Calendar 1,000 short tons, raw value Reexported in products: : : : : : : : : : : : : : : : : : : : : Polyhydric alcohol and livestock feed use: : : : : : : : : : : : : : : : : : : : : Total U.S. sugar deliveries 1/: : 2,007 2,208 2,418 2,303 : 8,875 8, : 2,067 2,201 2,492 2,303 : 9,063 9, : 2,145 2,307 2,579 2,291 : 9,334 9, : 2,127 2,334 2,585 2,405 : 9,337 9, : 2,215 2,390 2,557 2,457 : 9,567 9, : 2,215 2,429 2,641 2,469 : 9,742 9, : 2,261 2,465 2,616 2,508 : 9,812 9, : 2,271 2,594 2,693 2,609 : 10,066 10, : 2,348 2,513 2,641 2,589 : 10,111 10, : 2,399 2,524 2,628 2,524 : 10,140 10, , ,272 2,483 2,803 2,435 10,082 9, , ,233 2,415 2,893 9,976 Totals may not add due to rounding. Note: This table commenced in October 1991 when USDA began reporting monthly production data. Puerto Rico data were added beginning October / Fiscal year totals prior to 1994 differ from supply and use (table ) since WASDE includes Puerto Rico. Source: "Sweetener Market Data," Farm Service Agency, USDA. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

40 Table 16--U.S. sugar: supply and use, by fiscal year /1 Items 1996/ / / / / / / /04 Projection Jan ,000 short tons, raw value Beginning stocks 2 1,492 1,488 1,679 1,639 2,216 2,180 1,426 1,304 Total production 3,4 7,205 8,020 8,375 9,032 8,769 7,900 8,380 8,948 Beet sugar 4,013 4,389 4,423 4,956 4,680 3,915 4,415 4,852 Cane sugar 3,191 3,631 3,952 4,076 4,089 3,985 3,965 4,096 Florida 1,679 1,924 2,132 1,966 2,057 1,980 2,129 2,166 Louisiana 1,054 1,262 1,327 1,683 1,585 1,580 1,369 1,472 Texas Hawaii Puerto Rico Total imports 2,774 2,163 1,824 1,636 1,591 1,535 1,720 1,584 Tariff-rate quota imports 5 2,277 1,729 1,256 1,124 1,277 1,158 1,200 1,224 Other Program Imports Non-program imports Statistical adjustments Total Supply 11,471 11,671 11,878 12,317 12,576 11,615 11,526 11,836 Total exports Quota-exempt for reexport Other exports CCC disposal, for export Statistical difference Miscellaneous CCC disposal, for domestic non-food use Refining loss adjustment Statistical adjustment Sales for domestic use 9,742 9,815 10,066 10,111 10,130 10,082 9,974 9,675 Transfer to sugar-cont. products for exports under reexport program Transfer to polyhydric alcohol, feed Sales for domestic food and beverage use 9,564 9,672 9,872 9,993 9,998 9,894 9,767 9,450 Total Use 9,983 9,992 10,238 10,090 10,396 10,189 10,222 9,835 Ending stocks 3 1,488 1,679 1,639 2,216 2,180 1,426 1,304 2,001 Privately owned 1,488 1,679 1,639 1,919 1,395 1,214 CCC Percent Stocks-to-use ratio NOTE: Numbers may not add due to rounding. 1. Fiscal year beginning October Stocks in hands of primary distributors and CCC. 3. Historical data are from FSA (formerly ASCS), Sweetener Market Data, and NASS, Sugar Market Statistics prior to Production reflects processors' projections compiled by the Farm Service Agency. 5. Actual arrivals under the tariff-rate quota (TRQ) with late entries, early entries, and (TRQ) overfills assigned to the fiscal year in which they actually arrived. The 2003/04 available TRQ assumes shortfall of 50,000 tons. 6. Receipts compiled by NASS and FSA Customs data. 7. Calculated as a residual. Largely consists of invisible stocks change. Sugar consumption includes all sugar deliveries. Refined basis is raw value divided by Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

41 Table 17--U.S. high fructose corn syrup (HFCS) deliveries, quarterly, by fiscal and calendar year 1/ Quarter and Year / 1,000 short tons, dry weight Quarter I 1,611 1,616 1,648 1,762 1,833 1,920 1,975 2,072 2,129 2,165 2,114 2,122 II 1,866 1,939 2,083 2,126 2,241 2,311 2,439 2,482 2,482 2,370 2,527 2,469 III 1,723 1,955 2,065 2,097 2,141 2,286 2,399 2,440 2,400 2,433 2,491 2,408 IV 1,527 1,663 1,685 1,748 1,841 2,000 2,066 2,188 2,103 2,181 2,161 2,158 Year Fiscal 6,703 7,037 7,460 7,671 7,964 8,358 8,812 9,061 9,200 9,072 9,313 9,160 Calendar 6,727 7,173 7,481 7,733 8,057 8,517 8,879 9,183 9,114 9,149 9,293 9,157 1/ Includes Puerto Rico. 2/ Forecast Source: Economic Research Service Table 18--High fructose corn syrup: estimated number of per capita calories consumed daily, by calendar year 1/ Primary Loss from Weight Loss from Weight Loss at consumer level Per capita consumption Calories Serving Calories Servings Year weight primary to at retail/institutional at Other (adjusted for loss) per weight consumed (teaspoons) (market retail retail to consumer consumer Nonedible (uneaten food, serving daily 3/ consumed level) 2/ weight level level level share spoilage, etc.) daily 4/ lb/yr percent lb/yr percent lb/yr percent percent lbs/yr oz/daily g/daily number grams number teaspoons / Estimated number of daily per capita calories calculated by adjusting HFCS deliveries for domestic food and beverage use for food losses. 2/ U.S. per capita HFCS estimated deliveries for domestic food and beverage use, calendar year. See Table 50 of Sugar and Sweetener Yearbook series. 3/ Number of daily teaspoons multiplied by calories per serving. 4/ Grams per day divided by serving weight. Source: Economic Research Service. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29,

42 Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-239/January 29,