Agricultural Outlook Forum Presented: February 24-25, 2011 U.S. Department of Agriculture HIGH FRUCTOSE CORN SYRUP-THE WILDCARD IN THE U.S.-MEXICO SWEETENER MARKET Juan A. Cortina Gallardo
HIGH FRUCTOSE CORN SYRUP-THE WILDCARD IN THE U.S.-MEXICO SWEETENER MARKET FEBRUARY, 2011
INDEX I. Mexico leading sugar producer with a large Sweetener Market. II. North American Regional Market a Reality: II a) Mexican Sweetener Market. II b) U.S. Sweetener Market. II c) U.S. and Mexico Sweetener Market. III. Mexico: Sugar Balance 2010/011 marketing year, advance to January 31, 2011. 2
38,798 I. Mexico leading sugar producer with a large Sweetener Market. Mexico: World's sixth Leading Sugar Producer Cycle 2009/2010 Thousand metric tons, raw value 25,000 Mexico: World's sixth Leading Sugar Consumer Cycle 2009/2010 Thousand metric tons, raw value 20,325 15,250 13,123 11,673 7,169 7,119 5,026 4,282 4,090 3,635 3,596 9,403 6,055 5,323 5,303 4,565 3,574 2,771 Brazil India China Tailand USA Mexico Germany France Australia Russia India China Brazil USA Russia Mexico Indonesia Pakistan Germany Egypt Source: F.O.Licht's Intarnational Sugar and Sweetener Report World Sugar Balances 2000/2001-2009/2010.. 6,000 5,000 4,301 4,528 4,569 4,774 Mexican Market: Sugar and HFCS Consumption Thousand MetricTons 5,219 4,919 5,095 5,138 5,291 5,689 5,294 5,352 5,623 5,771 5,822 4,000 3,000 2,000 3,838 4,025 4,068 4,214 4,629 4,578 4,920 4,897 4,823 5,026 4,580 4,567 4,958 4,354 4,392 1,000 1,418 1,430 462 503 501 560 590 341 176 241 468 663 714 784 665 0 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 Proj. 10/11 Source: CNIAA and Ministryof Economy HFCS, dry weight Sugar 3
I. Mexico leading sugar producer with a large Sweetener Market. 6,100 Mexican Sugar: Production and Consumption Thousand Metric Tons 5,796 5,600 5,100 4,600 4,100 4,034 3,951 4,077 4,037 4,275 4,406 4,543 5,174 4,699 4,696 4,214 4,924 4,629 4,872 4,578 4,928 4,920 5,024 4,897 4,823 5,276 5,026 5,314 4,580 5,521 4,567 4,962 4,958 4,826 4,354 5,368 4,392 3,600 3,559 3,910 4,048 3,984 3,838 4,025 4,068 3,100 3,266 3,529 Production Consumption 1,600 1,518 Mexican Sugar Export to USA and the Rest of the World Thousand Metric Tons 1,400 1,281 1,249 1,200 1,111 1,000 947 800 837 751 600 607 579 552 712 610 400 477 Source: CNIAA 200-184 126 56 47 181 13 167 151 290 155 290 91 70 93 174 1 35 4 110 Imports Exports
US SWEETENER INDUSTRY North American Sweetener market fully integrated. Since the market opened: Mexico has exported more than 2,7 millions sugar tons to U.S. Mexico has imported 1,7 millions tons dry of HFCS from U.S. Good Coordination and cooperation between Mexican and U.S. Governments regarding sweeteners: Mochis La Primavera El Dorado A. Saenz MEXICAN SUGAR INDUSTRY The Administration in each country sugar program consistent with NAFTA obligations. El Mante Puga El Molino Bellavista Sn. Fco. Ameca M. Ocampo José Ma. Mor. Tala Tamazula Quesería Santa Clara L. Cárdenas Pedernales S. M. Naranjo 04 63 Casasano E. Zapata El Higo Zapoapita Plan de San Luis Atencingo Independencia Calipam P. Machado A. L. Mateos Sta. Rosalía B. Juárez El Refugio Pujiltic Huixtla La Joya. Azsuremex Mexico is a reliable supplier in the integrated North American Regional Market. 5
II a) Mexican Sweetener Market Mexico: Production, imports and national consumption of HFCS, Marketing years 1991/92 to 2010/11 (projected) (Metric Tons, dry weight) 1,600,000 1,400,000 1,417,710 Projeted 1,430,157 1,200,000 1,000,000 20% tax to soft drinks sweetened with sweeteners different to cane sugar. 954,590 962,971 800,000 600,000 400,000 200,000 0 22,218 Period without domestic production of HFCS 34,794 22,218 34,794 72,704 96,061 72,704 96,061 462,332 293,786 144,558 168,546 144,558 278,935 503,015 224,080 500,507 304,476 560,481 340,484 590,100 357,215 341,437 258,758 Antidumping investigation against HFCS 175,566 241,074 235,416 467,630 349,423 169,651 5,915 5,658 118,207 663,119 713,940 391,042 407,075 272,077 306,866 341,934 442,551 784,485 361,667 664,778 303,111 463,120 467,186 Substitution of sugar due to lower HFCS prices 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 Domestic Production Imports Domestic Consumption Source: CNIAA and CONADESUCA Note: In the World Agricultural Demand and Supply Estimates (WASDE) on February 9,2011 the HFCS consumption is projected in 1,750 thousand metric tons, dry weight. 6
II a) Mexican Sweetener Market 0 100,000 57,036 39,088 82,761 40,478 60,019 37,860 HFCS Imports and Production, Metric tons, dry weight 91,993 38,334 Oct 09 Nov'10 Dec'09 Jan'11 (Preliminary) Production Imports 70,324 38,321 83,060 38,708 The production estimated of HFCS in cycle 2010/2011, will increase about 1%. 54,125 38,637 74,995 39,173 In the cycle 2010/2011 (to january), Mexico has imported 332,809 metric tons dry weight, 38% up that in the same period in the last cycle. HFCS Imports and Production, cycles 2009/2010 and 2010/2011 Metric tons, dry weight 1,417,710 Metric tons Domestic Consumption 1,430,157 Metric tons 954,590 962,971 463,120 467,186 2009/2010 2010/2011 Proj. Production Imports 7
II a) Mexican Sweetener Market Commercial Year Metric Tons, dry weight 2008/2009 664,778 2009/2010 1,417,710 2010/2011*/ Projected 1,430,157 HFCS consumption, from Oct 08 to Jan 11 Metric tons, dry weight 100,000 0 Oct 08 Oct'09 Nov'08 Nov'09 Dec'08 Dec'09 Jan'09 Jan'10 Feb'09 Feb'10 Mar'09 Mar'10 Apr'09 Apr'10 May'09 May'10 Jun'09 Jun'10 Jul'09 Jul'10 Aug'09 Aug'10 Sep'09 Sep'10 Oct 09 Oct'10 Nov'09 Nov'10 Dec'09 Dec'10 Jan'10 Jan'11 60,757 96,124 43,388 97,879 53,041 108,644 36,730 92,761 38,147 95,596 42,190 119,152 50,717 142,128 60,658 120,651 62,987 144,640 62,756 151,740 70,618 114,456 82,790 133,939 96,124 123,239 97,879 130,328 108,644 121,767 92,761 112,305 */ preliminary Source: CNIAA 8
II b) USA Sweetener Market 15,000 14,500 14,000 13,500 13,000 12,500 12,000 13,175 14,314 13,533 U.S and Mexico Sugar: Combined Production plus Minimum of U.S. Imports and combined Consumption Thousand Metric Tons, raw value Combined Production plus Minimum of U.S. Imports* 13,881 12,336 13,475 14,012 13,719 12,873 14,368 14,315 14,433 14,160 13,176 Combined Consumption Combined Production 13,294 12,316 14,565 14,543 13,562 13,295 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 Proj. 10/11 * Mexico and U.S. Production plus Minimum of U.S. Imports (WTO & CAFTA) 14,127 14,617 14,498 13,248 12,092 14,537 13,350 14,500 13,603 12,343 14,300 14,178 12,915 Source: USDA, 2010/2011 forecast 9
II b) USA Sweetener Market Equivalent in million short tons, raw value 10.2 10.0 9.8 9.6 9.4 9.2 9.0 8.8 8.6 8.4 From its peak in 2002, total HFCS domestic demand through 2010 fell 15.2 percent HFCS Domestic Demand Fiscal Year 10
II c) U.S. and Mexico Sweetener Market Mexico and U.S.: Behaviour of prices under NAFTA FOB Sugar Mill price Oct 09-Feb 11: Mexico (SNIIM standard and refined) and U.S. (C-16 and Sugar beet Midwest) (U.S. Dollars/Metric Tons) 1,320.00 DPD-CNIAA 1,250.00 1,180.00 1,110.00 1,040.00 970.00 900.00 Price Midwest Beet EUA, 1,190.48 Price SNIIM Refined Sugar, 929.65 Price C-16 EUA, 877.43 830.00 760.00 690.00 Price SNIIM Standard Sugar, 794.11 620.00 550.00 Comercial Year 09/10 Comercial Year 10/11 Commercial Year 09/10 Commercial Year 10/11 09/2009 10/2009 11/2009 12/2009 01/2010 02/2010 03/2010 04/2010 05/2010 06/2010 07/2010 08/2010 09/2010 10/2010 11/2010 12/2010 01/2011 02/2011 Source: Sugar Midwest Beet: Milling and Baking News,C16-ICE;(IntercontinentalExchange):https://www.theice.com/homepage.jhtmland Sugar Mexican Prices standard and refined SNIIM:www.economia-sniim.gob.mx/Nuevo/ 11
III. Mexico: Sugar Balance 2010/011 marketing year, advance to January 31, 2011 Concept Total Supply Begining Stocks Production Total Imports Non quota Quota Total Demand Total Exports Sugar Mills Definitive NAFTA Rest of the World IMMEX Temporaly Other Companies Domestic Consumption Sugar Mills Domestic Sales Other Imports Non Quota Quota Ending Stocks 1/ Preliminary data Source: CONADESUCA October 2010 - January 2011 1/ Total Standard Sugar Refined Sugar 2,861,241 1,836,149 1,025,092 918,099 505,275 412,824 1,877,821 1,318,476 569,345 55,321 12,399 42,922 2,568 88 2,480 52,753 12,310 40,443 1,719,836 1,108,956 610,880 342,698 161,728 180,970 241,768 117,915 123,853 241,768 117,915 123,853 220,762 111,346 109,416 1,275 50 1,225 19,730 6,519 13,212 - - - 100,931 43,814 57,117 1,377,138 947,277 429,911 1,321,817 934,829 386,988 55,321 12,399 42,922 2,568 88 2,480 52,753 12,310 40,443 1,141,405 727,193 414,212 12