Sugar and Sweeteners Outlook

United States Department of Agriculture Electronic Outlook Report from the Economic Research Service www.ers.usda.gov 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, 2004. --------------- 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 8.250 million STRV. When USDA made its decision in September, the raw cane sugar price averaged 21.34 cents a pound for September and the refined beet sugar price averaged 24.00 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 8.948 million STRV. It is comprised of 4.852 million STRV of beet sugar and 4.096 million of raw cane sugar. Processors and millers estimate FY 2003 sugar production at 8.380 million STRV, comprised of 4.415 million STRV of beet sugar and 3.965 million STRV of raw cane sugar.

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 1.117 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 2004. 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 9.450 million STRV, an amount deemed compatible with the current OAQ level. Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 2

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 8.250 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 4.484 million STRV 3.766 million STRV 8.250 million STRV The USDA made its decision after the release of the September 2003 WASDE. That WASDE projected ending stocks at 2.012 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 21.34 cents a pound for September, and the refined beet sugar price averaged 24.00 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 8.948 million STRV. It is comprised of 4.852 million STRV of beet sugar and 4.096 million of raw cane sugar. Processors and millers estimate FY 2003 sugar production at 8.380 million STRV, comprised of 4.415 million STRV of beet sugar and 3.965 million STRV of raw cane sugar. Beet Sugar Production The National Agricultural Statistics Service (NASS) estimates sugarbeet area planted for FY 2004 at 1.365 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 2003. 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, 2004 3

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, 4.185 million STRV (54.35 percent of the OAQ); and raw cane sugar, 3.515 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: 4.457 million for beet sugar; and 3.743 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 8.663 million STRV. Resulting Sector allotments were: 4.708 million STRV for beet sugar; and 3.955 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 4.534 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 3.945 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 4.647 million STRV, and the cane sugar allotment was set at 3.903 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: 4.484 million STRV to beet sugar processors, and 3.766 million STRV to cane sugar processors. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 4

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/ 4,483,875 0 4,483,875 Amalgamated Sugar Co. 934,192 0 934,192 American Crystal Sugar Co. 1,724,154 0 1,724,154 Holly Sugar Corp. 300,842 0 300,842 Michigan Sugar Co. 286,462 0 286,462 Minn-Dak Farmers Co-op. 279,737 0 279,737 Monitor Sugar Co. 164,149 0 164,149 Southern Minnesota Beet Sugar Co-op. 288,049 0 288,049 Western Sugar Co. 446,473 0 446,473 Wyoming Sugar Co. 59,816 0 59,816 Cane processors marketing allocations 2/ 3,766,125 0 3,766,125 Florida 1,874,073 3,013 1,877,086 Atlantic Sugar Assoc. 148,913 239 149,152 Growers Co-op. Of Florida 339,889 546 340,435 Okeelanta Corp. 381,313 613 381,926 Osceola Farms Co. 228,853 368 229,221 U.S. Sugar Corp. 775,105 1,246 776,351 Louisiana 1,409,688 2,266 1,411,954 Alma Plantation 75,769 122 75,891 Caire & Graugnard 3,298 5 3,303 Cajun Sugar Co-op. 100,634 162 100,796 Cora-Texas Mfg. Co. 126,600 204 126,804 Harry Laws & Co. 60,112 97 60,209 Iberia Sugar Co-op. 68,038 109 68,147 Jeanerette Sugar Co. 65,742 106 65,848 Lafourche Sugars Corp. 72,547 117 72,664 Louisiana Sugarcane Co-op. 87,483 141 87,624 Lula Westfield, LLC. 158,570 255 158,825 M.A. Patout & Sons 389,558 626 390,184 St. Mary Sugar Co-op. 95,719 154 95,873 South Louisiana Sugars Co-op. 105,619 170 105,789 Texas 157,364 253 157,617 Rio Grande Valley 157,364 253 157,617 Hawaii 318,956 513 319,469 Gay & Robinson, Inc. 68,143 110 68,253 Hawaiian Commercial & Sugar Co. 250,813 403 251,216 Puerto Rico 3/ 6,044-6,044 0 Agraso 3,876-3,876 0 Roig 2,169-2,169 0 1/ Processor allocations based on shares of domestic beet sugar production during the crop years 1998-2000. 2/ 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, 2004 5

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 17.73 17.33 18.44 18.04 18.00 Cost of loan redemption and marketing: Interest expense 1/ 0.33 0.32 0.35 0.34 0.34 Transportation costs 1.95 2.00 1.21 1.07 0.52 Location discounts 0.00 1.25 0.40 0.20 0.00 Minimum price 20.01 20.90 20.40 19.65 18.86 1/ 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 23.80 22.96 23.32 22.42 21.99 23.76 Cost of loan redemption and marketing: Price increase to cover processor's interest expense 1/ 0.95 0.43 0.44 1.11 0.41 1.17 Cash discount (2%) 0.51 0.48 0.48 0.48 0.46 0.51 Minimum price (2.50 % int.) 25.26 23.87 24.24 24.01 22.86 25.44 1/ [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, 2004 6

Very little of the acreage planted to sugarbeets was abandoned prior to harvest -- NASS estimates sugarbeet area harvested at 1.348 million, and the ratio of area harvested to area planted is calculated at 98.68 percent, the highest ratio since FY 1988. In spite of area reductions, NASS estimates an increase in sugarbeet production of 2.887 million tons over FY 2003, to 30.605 million tons. National sugarbeet yield is estimated at 22.7 tons per acre, an 11.3- 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 4.852 million STRV indicates a content/recovery per harvested acre of 3.600 STRV, which would be a record high. Sugar production net of desugared molasses for September through November has amounted to 1.682 million STRV from sliced beets totaling 11.669 million tons. The implied recovery is 14.42 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 15.61 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 4.800 million STRV seems very likely. Cane Sugar Production FY 2004 sugar production is projected at 4.096 million STRV, which is about 3 percent higher than FY 2003. NASS estimates a national sugarcane for sugar crop for the 2003 crop year at 34.368 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 2.166 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 16.630 million tons. Sugar per acre is projected at 5.14 tons, indicating high sucrose content and also excellent sugar recovery, at 13.02 percent. With the 2003 harvest completed before the start of the new year, cane sugar millers in Louisiana project FY 2004 sugar production at 1.472 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 1.569 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 2003 -- 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, 2004 7

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 1.224 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 1.117 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 1703.10.30), 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 2004. 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 2003. Cane millers shipments began exceeding cane refiners receipts in April 2002 and continued for an additional five consecutive months until September 2002. 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 2003. 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, 2004 8

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 9.450 million STRV. This sales projection is consistent with the OAQ allocated at 8.250 million STRV. If the total import projection of 1.584 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 9.450 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 2003. Survey results indicated that beet processors held 108,955 STRV as of September 30, 2002, and 409,815 STRV as of September 30, 2003. Based on the survey results, deliveries are estimated from the sales data to be 9.785 million STRV for FY 2002 and 9.468 million STRV for FY 2003. 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 2000. 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 2000. 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 1998. Figure 1 Trends in domestic sugar deliveries, monthly basis, for selected end uses Short tons, actual weight 200,000 180,000 160,000 Bakery and cereals 140,000 120,000 Confectionery 100,000 80,000 60,000 Multiple use 40,000 20,000 0 1992 1994 1996 1998 2000 2002 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, 2004 9

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 1993 263.2 2,280 2,046 2,172 2,432 8,930 63.4 1994 266.4 2,277 2,121 2,265 2,533 9,196 64.5 1995 269.5 2,260 2,105 2,311 2,542 9,218 63.9 1996 272.7 2,379 2,191 2,355 2,519 9,445 64.7 1997 275.9 2,430 2,143 2,401 2,591 9,565 64.8 1998 279.1 2,443 2,233 2,428 2,568 9,672 64.8 1999 282.3 2,458 2,208 2,553 2,655 9,873 65.4 2000 285.5 2,580 2,318 2,484 2,611 9,993 65.4 2001 288.6 2,564 2,370 2,486 2,580 10,000 64.8 2002 2/ 291.7 2,474 2,227 2,439 2,645 9,785 62.7 2003 3/ 294.7 2,497 2,183 2,360 2,429 9,466 60.0 Estimated sugar in imported sugar-containing products 1993 -- 56 52 52 53 213 -- 1994 -- 53 45 48 61 207 -- 1995 -- 57 68 73 83 281 -- 1996 -- 83 71 76 90 320 -- 1997 -- 91 78 94 102 364 -- 1998 -- 100 91 112 121 425 -- 1999 -- 111 111 130 144 496 -- 2000 -- 134 126 138 144 542 -- 2001 -- 138 133 146 159 576 -- 2002 -- 152 147 174 190 664 -- 2003 -- 179 169 189 208 745 -- Estimated sugar in exported sugar-containing products 1993 -- 79 71 65 77 292 -- 1994 -- 86 71 81 73 311 -- 1995 -- 72 81 77 89 319 -- 1996 -- 90 77 88 95 351 -- 1997 -- 96 99 100 108 404 -- 1998 -- 100 91 106 103 400 -- 1999 -- 108 92 98 104 402 -- 2000 -- 111 101 114 125 451 -- 2001 -- 129 105 119 124 476 -- 2002 -- 134 89 93 100 416 -- 2003 -- 108 93 101 109 410 -- Estimated sugar in USDA sugar-containing product re-export program 1993 -- 26 23 26 57 132 -- 1994 -- 24 20 39 43 126 -- 1995 -- 28 18 18 39 103 -- 1996 -- 21 20 30 32 104 -- 1997 -- 22 68 22 45 157 -- 1998 -- 21 24 32 46 123 -- 1999 -- 44 58 35 32 169 -- 2000 -- 21 21 22 22 86 -- 2001 -- 18 21 29 30 98 -- 2002 -- 40 39 35 42 156 -- 2003 -- 43 44 49 47 183 -- Estimated sugar deliveries adjusted for trade in sugar-containing products 1993 -- 2,283 2,050 2,185 2,465 8,983 63.8 1994 -- 2,268 2,116 2,271 2,563 9,218 64.7 1995 -- 2,272 2,110 2,326 2,574 9,282 64.4 1996 -- 2,394 2,205 2,374 2,546 9,517 65.2 1997 -- 2,446 2,189 2,416 2,630 9,681 65.6 1998 -- 2,465 2,258 2,466 2,631 9,820 65.8 1999 -- 2,505 2,285 2,620 2,727 10,137 67.1 2000 -- 2,624 2,364 2,529 2,653 10,171 66.6 2001 -- 2,591 2,419 2,542 2,646 10,198 66.0 2002 -- 2,533 2,323 2,556 2,777 10,188 65.3 2003 -- 2,610 2,303 2,497 2,575 9,984 63.3 1/ 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 2003. 3/ 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 2004. Source: USDA (deliveries data), ERS (sugar in traded products) Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 22, 2004 10

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 9.986 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 2000. 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 2002. Figure 2 Estimated fiscal year per capita sugar deliveries adjusted for trade in sugarcontaining products (SCP) Pounds 70.0 68.0 66.0 64.0 62.0 60.0 58.0 56.0 54.0 Sugar deliveries incl. SCP Domestic sugar deliveries for food and beverage 1993 1995 1997 1999 2001 2003 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) 1,900 1993 1996 1999 2002 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, 2004 11

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 2003. 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 2004. 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 2003. 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 9.629 million STRV. This would be the number relevant for OAQ determination. Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 12

Table 5--Sugar sales less estimated deliveries, by enduse category Category Sept. 2002 Oct. 2002 Nov. 2002 Sept. 2003 Oct. 2003 Nov. 2003 short tons, actual weight Industrial use Bakery and cereal -- -- -- 38,206-51,157-31,215 Confectionery -- -- -- -- -43,982-18,257 Ice cream and dairy 5,338 -- -- -- -6,964 -- Beverage 3,745 -- -- -- -- -- Canned, processed -- -- -- -- -- -- Multiple uses -- -- -- -- -24,747-16,766 Non-food 3,080 -- -- -- -- Sub-total 12,164 -- -- 38,206-126,850-66,238 Non-industrial use Wholesale 23,163 -- -- 171,799-43,262-23,219 Retail grocery -- -- -- -- -- -- Other 82,908-12,118 -- 87,977 -- -- Hotels and restuarants -- -- -- -- -- -- Sub-total 106,070-12,118 -- 259,776-43,262-23,219 Total 118,234-12,118 -- 297,982-170,113-89,458 -- = not statistically different from zero. Source: Economic Research Service. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 13

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 513,129 538,100 533,538 Beverage 178,975 208,235 198,793 Canned, processed 305,094 300,314 306,840 Multiple uses 707,171 660,861 709,678 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 248,789 231,549 233,424 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, 2004 14

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, 2004 15

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 1992. 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 1.532 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 54.35 percent of the overall quantity and raw cane sugar at 45.65 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, 2004 16

if the notion of "reasonable carryover stocks" were a well-understood and applied concept as it was before FY 2000. 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 2003. Because marketing allotments were not put into place until FY 2003, Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 17

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 2003. 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 2003. 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 2003. 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 2003. The final OAQ adjustment was made on May 13, 2003, raising the OAQ to 8.663 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 4.534 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 3.945 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 4.506 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 4.205 million STRV. Table A2 shows the WASDE and an alternative version for FY 2002 through FY 2004. 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 2004. 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 2004. 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, 2004 18

Table A1--Sugar allotments in fiscal year 2003 Items Refined beet sugar Raw cane sugar 1,000 short tons, raw value Allotment 4.708 3.955 Assignment to the Com- 0.174 0.010 -modity Credit Corp. Processors' allotments 4.534 3.945 Processors' sales 4.506 3.861 Processors' deliveries 4.205 0.006 Processors' shipments -- 3.855 Source: USDA. Table A2--U.S. sugar production, supply, and distribution: December 2003 WASDE and an alternative 1/ 2/ December 2003 WASDE Alternative Item 2001/02 2002/03 2003/04 2001/02 2002/03 2003/04 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 137 142 160 137 142 160 Miscellaneous -31 95 0-31 95 0 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 188 207 225 188 207 225 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 14.0 12.8 20.6 15.2 17.3 24.7 1/ 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, 2004 19

prices and ending stocks-to-use ratios. (For FY 2002-2003, 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: 0.697 compared with 0.542. 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: 2.085 compared with 2.498. 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: 0.775 compared with 0.606; the standard error of the equation is lower: 1.109 compared with 1.470; the Schwarz criterion is lower: 3.498 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 1982-2003, 1982-1991, and 1992-2003. The first two data columns reproduce the results from table 5; that is, the results over 1982-2003. These results can be compared with the equation estimated over the first half of the period, specifically 1982-1991. Although the coefficient values are not far different (-0.385 versus -0.398), the amount of explained price error variance (the adjusted R2), has gone down from 0.910 to 0.697. The equation estimated over 1992-2003 (results in the fifth and sixth data columns) show similar coefficient values as the other equations but the adjusted R2 is only 0.640. 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 -0.465, with the adjusted R2 rising to 0.871 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 10.9. Although statistically, it is not clear that the averages have changed much, it is the case that they have exhibited more variability since 1993. 3 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 1982-2003. 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, 2004 20

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 1982 21.83 28.20 17.4 18.3 1993 21.90 26.92 17.7 14.1 1983 22.28 26.96 15.3 11.7 1994 22.11 24.90 13.6 22.7 1984 21.77 25.35 17.7 15.3 1995 23.62 25.00 12.6 7.9 1985 20.44 23.40 20.5 16.0 1996 22.23 29.17 15.1 20.0 1986 20.90 23.85 19.4 5.7 1997 22.18 26.68 14.9 1.2 1987 21.94 24.33 16.6 14.3 1998 22.26 26.17 16.8 12.8 1988 22.37 27.45 15.2 8.2 1999 21.32 27.00 16.0 4.7 1989 23.54 28.67 14.0 8.4 2000 18.24 19.57 21.9 37.1 1990 23.31 30.50 13.2 5.5 2001 20.87 23.21 21.0 4.5 1991 21.71 25.33 16.0 21.6 2002 21.14 25.22 15.2 27.3 1992 21.33 25.00 15.5 3.5 2003 21.31 25.71 17.3 13.6 Average 21.95 26.28 16.4 11.7 21.56 25.41 16.6 15.1 Std. deviation 0.92 2.25 2.2 5.9 1.33 2.46 2.9 10.9 1/ 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 27.006 25.847 28.112 30.726 Ending stocks-touse ratio -0.324 5.089-0.385 7.024 Summary statistics: Adjusted R2 0.542 -- 0.697 -- Standard error 0.769 -- 0.626 -- Schwarz criterion 1/ 2.498 -- 2.085 -- Durbin-Watson 1.604 -- 2.483 -- Observation period: FY 1982-2003. 1/ 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, 2004 21

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 44.250 12.427 44.424 21.267 Index variable for FY 1994 and 1995-3.272 2.769-3.571 4.898 Ending stocks-touse ratio -0.725 5.500-0.907 10.618 Ratio of beet sugar production to sum of total production and TRQ/quota imports -0.148 2.360-0.079 2.038 First-order autoregressive coeff. -0.489 2.361 Summary statistics: Adjusted R2 0.606 -- 0.775 -- Standard error 1.470 -- 1.109 -- Schwarz criterion 1/ 3.969 -- 3.498 -- Durbin-Watson 1.963 -- 2.518 -- Observation period: FY 1982-2003. 1/ 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: 1982-2003 1982-1991 1992-2003 1992-2003, with correction for autocorrelation Variables Coeff. T-statistic Coeff. T-statistic Coeff. T-statistic Coeff. T-statistic Constant 28.112 30.726 28.582 41.443 27.812 19.852 29.210 77.502 Ending stocks-touse ratio -0.385 7.024-0.398 9.612-0.381 4.532-0.465 20.311 First-order autoregressive coeff. -- -- -- -- -- -- -1.182 4.736 Second-order auto- -- regressive coeff. -- -- -- -- -- -- -0.834 3.075 -- Summary statistics: -- Adjusted R2 0.697 -- 0.910 -- 0.640 -- 0.871 -- Standard error 0.626 -- 0.647 -- 0.764 -- 0.457 -- Schwarz criterion 1/ 2.085 -- 0.560 -- 2.532 -- 1.696 -- Durbin-Watson 2.483 -- 2.025 -- 3.018 -- 1.829 -- 1/ 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, 2004 22

Table A7--Estimated relationships between third-quarter raw sugar price and adjusted ending fiscal year stocks-to-use ratio, fiscal years 1982-2003 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) 28.112 30.726 27.988 35.108 28.064 51.766 28.033 62.335 Ending stocks-touse ratio (STU) - c(2) -0.385 7.024-0.346 6.952-0.365 11.218-0.364 13.416 Absolute value of percentage change in STU - c(3) -- -- -0.039 2.726 -- -- -- -- Adjustment coefficient for: 1992 (D92) - c(4) 5/ -- -- -- -- -0.070 3.171 -- -- 1994 (D94) - c(5) -- -- -- -- -0.071 2.749 -- -- 1999/2000 (D9900) - c(6) -- -- -- -- -0.073 5.311 -- -- 2002 (D02) - c(7) -- -- -- -- -0.089 3.979 -- -- Equal coeff. restriction - c(8) -- -- -- -- -- -- -0.075 7.989 -- -- Adjusted R2 0.697 0.771 -- 0.916 -- 0.927 -- Standard error 0.626 0.544 -- 0.329 -- 0.307 -- Schwarz criterion 6/ 2.085 1.896 -- 1.142 -- 0.754 -- Durbin-Watson 2.483 2.472 -- 2.144 -- 2.098 -- Observation period: FY 1982-2003. 1/ 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, 2004 23

excluding the absolute change variable and substituting adjustment coefficients for the following years: 1992, 1994, 1999-2000, and 2002. The adjusted R2 rises to 0.916 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 -0.364 for a 1-percent increase in the ending stocks-to-use ratio; however, for certain years (1992, 1994, 1999-2000, and 2002), the change might jump by an additional -0.075 to -0.439. 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 1999-2000 (a low of 17.24 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 1992. 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 1.532 million STRV. The relevant equation from table 7 is: 28.033-.439*(ending stocks-to-use)=raw sugar price, with a standard error (SE) of 0.307. The minimum price to avoid forfeiture in Louisiana (the highest minimum price in all cane producing States) is 20.90 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 0.307. Multiplying this number by 1.632 and adding the product to the 20.90 cents is 21.40 cents. Inserting this number into the equation produces a desired ending stocks-to-use ratio of 15.11 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 9.835 million STRV. Multiplying this number by 0.1511 produces a reasonable stocks level of 1.486 million STRV. Adding this number to projected deliveries of 9.45 million STRV and then subtracting the sum of beginning stocks of 1.714 million STRV and 1.532 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, 0.307. Multiplying the SE by 1.632 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, 2004 24

References U.S. Department of Agriculture. "Program-Induced Behavior Affects the Data," in Sugar and Sweeteners Outlook, Economic Research Service. SSS-237, May 2003. U.S. general Accounting Office. Sugar Program: Changing the Method for Setting Import Quotas Could Reduce Cost to Users. GAO/RCED-99-209, July 1999. U.S. Department of Agriculture. Sweetener Market Data: September 2003 Data. Farm Service Agency. Vol. 12, Issue 12, December, 2003. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 25

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 11,174 112 9,049 2,013 2000/2001 2,013 7,956 1,443 11,412 128 9,306 1,978 2001/2002 1,978 7,174 1,393 10,545 124 9,127 1,294 2002/2003 1,294 7,600 1,554 10,448 129 9,135 1,184 2003/2004 1,184 8,070 1,437 10,691 145 8,778 1,768 Canada 1999/2000 115 73 1,207 1,395 13 1,265 117 2000/2001 117 121 1,211 1,449 13 1,242 194 2001/2002 194 88 1,239 1,521 14 1,254 253 2002/2003 253 54 1,190 1,497 18 1,351 128 2003/2004 128 98 1,350 1,576 157 1,275 144 Mexico 1999/2000 941 4,979 37 5,957 318 4,576 1,063 2000/2001 1,063 5,220 43 6,326 155 4,623 1,548 2001/2002 1,548 5,169 52 6,769 413 5,184 1,172 2002/2003 1,172 5,229 65 6,466 46 5,227 1,193 2003/2004 1,193 5,464 103 6,760 66 5,345 1,349 Total North America 1999/2000 2,543 13,255 2,728 18,526 443 14,890 3,193 2000/2001 3,193 13,297 2,697 19,187 296 15,171 3,720 2001/2002 3,720 12,431 2,684 18,835 551 15,565 2,719 2002/2003 2,719 12,883 2,809 18,411 193 15,713 2,505 2003/2004 2,505 13,632 2,890 19,027 368 15,398 3,261 Caribbean: Cuba 1999/2000 488 4,060 0 4,548 3,400 710 438 2000/2001 438 3,500 0 3,938 2,980 720 238 2001/2002 238 3,700 0 3,938 3,100 710 128 2002/2003 128 2,000 0 2,128 1,350 700 78 2003/2004 78 2,000 0 2,078 1,250 700 128 Dominican Republic 1999/2000 58 426 25 509 185 298 26 2000/2001 26 470 26 522 185 310 27 2001/2002 27 460 44 531 185 317 29 2002/2003 29 490 16 535 185 325 25 2003/2004 25 495 15 535 185 327 23 Other Caribbean 1999/2000 153 490 312 955 395 389 171 2000/2001 171 450 280 901 332 391 178 2001/2002 178 428 232 838 316 382 140 2002/2003 140 397 261 798 285 384 129 2003/2004 129 400 252 781 285 374 122 Total Caribbean 1999/2000 699 4,976 337 6,012 3,980 1,397 635 2000/2001 635 4,420 306 5,361 3,497 1,421 443 2001/2002 443 4,588 276 5,307 3,601 1,409 297 2002/2003 297 2,887 277 3,461 1,820 1,409 232 2003/2004 232 2,895 267 3,394 1,720 1,401 273 continued-- Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 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 Central America: Guatemala 1999/2000 70 1,617 0 1,687 1,140 451 96 2000/2001 96 1,632 0 1,728 1,190 468 70 2001/2002 70 1,965 12 2,047 1,310 508 229 2002/2003 229 1,900 5 2,134 1,335 530 269 2003/2004 269 1,900 0 2,169 1,335 535 299 Other Central America 1999/2000 277 1,875 32 2,184 819 980 385 2000/2001 385 1,850 0 2,235 927 991 317 2001/2002 317 1,795 0 2,112 781 1,003 328 2002/2003 328 1,823 0 2,151 806 1,028 317 2003/2004 317 1,867 0 2,184 868 1,055 261 Total Central America 1999/2000 347 3,492 32 3,871 1,959 1,431 481 2000/2001 481 3,482 0 3,963 2,117 1,459 387 2001/2002 387 3,760 12 4,159 2,091 1,511 557 2002/2003 557 3,723 5 4,285 2,141 1,558 586 2003/2004 586 3,767 0 4,353 2,203 1,590 560 South America: Brazil 1999/2000 1,010 20,100 0 21,110 11,300 9,100 710 2000/2001 710 17,100 0 17,810 7,700 9,250 860 2001/2002 860 20,400 0 21,260 11,600 9,450 210 2002/2003 210 23,810 0 24,020 14,000 9,750 270 2003/2004 270 24,780 0 25,050 14,250 10,050 750 Colombia 1999/2000 72 2,330 10 2,412 959 1,393 60 2000/2001 60 2,225 25 2,310 965 1,305 40 2001/2002 40 2,465 64 2,569 1,085 1,425 59 2002/2003 59 2,565 56 2,680 1,264 1,410 6 2003/2004 6 2,680 57 2,743 1,265 1,415 63 Argentina 1999/2000 322 1,670 1 1,993 200 1,530 263 2000/2001 263 1,540 2 1,805 189 1,470 146 2001/2002 146 1,600 1 1,747 137 1,480 130 2002/2003 130 1,650 1 1,781 270 1,440 71 2003/2004 71 1,650 1 1,722 210 1,440 72 Other South America 1999/2000 964 3,079 859 4,902 422 3,510 970 2000/2001 970 3,171 903 5,044 425 3,518 1,101 2001/2002 1,101 3,501 892 5,494 496 3,585 1,413 2002/2003 1,413 3,645 577 5,635 517 3,632 1,486 2003/2004 1,486 3,620 649 5,755 631 3,750 1,374 Total South America 1999/2000 2,368 27,179 870 30,417 12,881 15,533 2,003 2000/2001 2,003 24,036 930 26,969 9,279 15,543 2,147 2001/2002 2,147 27,966 957 31,070 13,318 15,940 1,812 2002/2003 1,812 31,670 634 34,116 16,051 16,232 1,833 2003/2004 1,833 32,730 707 35,270 16,356 16,655 2,259 continued-- Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 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 Western Europe 2/ European Union 1999/2000 3,107 19,498 1,786 24,391 6,138 14,523 3,730 2000/2001 3,730 18,519 1,839 24,088 6,607 14,061 3,420 2001/2002 3,420 16,153 2,025 21,598 4,793 14,088 2,717 2002/2003 2,717 18,675 2,150 23,542 5,600 14,361 3,581 2003/2004 3,581 17,132 1,900 22,613 4,900 14,358 3,355 Other Western Europe 1999/2000 157 190 389 736 0 549 187 2000/2001 187 238 390 815 7 559 249 2001/2002 249 190 470 909 4 567 338 2002/2003 338 236 341 915 7 577 331 2003/2004 331 209 365 905 5 577 323 Total Western Europe 1999/2000 3,264 19,688 2,175 25,127 6,138 15,072 3,917 2000/2001 3,917 18,757 2,229 24,903 6,614 14,620 3,669 2001/2002 3,669 16,343 2,495 22,507 4,797 14,655 3,055 2002/2003 3,055 18,911 2,491 24,457 5,607 14,938 3,912 2003/2004 3,912 17,341 2,265 23,518 4,905 14,935 3,678 Eastern Europe: 3/ Poland 1999/2000 326 1,962 55 2,343 418 1,736 189 2000/2001 189 2,188 49 2,426 437 1,733 256 2001/2002 256 1,674 97 2,027 61 1,728 238 2002/2003 238 2,194 85 2,517 434 1,728 355 2003/2004 355 2,065 55 2,475 435 1,736 304 Russian Federation 1999/2000 2,650 1,500 5,170 9,320 190 6,130 3,000 2000/2001 3,000 1,550 5,650 10,200 260 6,840 3,100 2001/2002 3,100 1,630 4,850 9,580 410 7,040 2,130 2002/2003 2,130 1,580 3,900 7,610 260 6,300 1,050 2003/2004 1,050 1,800 3,800 6,650 110 6,000 540 Ukraine 1999/2000 295 1,720 329 2,344 130 1,937 277 2000/2001 277 1,687 400 2,364 8 2,100 256 2001/2002 256 1,790 250 2,296 90 2,020 186 2002/2003 186 1,550 1,400 3,136 350 2,350 436 2003/2004 436 1,400 1,050 2,886 400 2,200 286 Other Eastern Europe 1999/2000 1,182 2,387 2,678 6,247 551 4,244 1,452 2000/2001 1,452 1,939 2,763 6,154 580 4,279 1,295 2001/2002 1,295 2,253 2,949 6,497 822 4,226 1,449 2002/2003 1,449 2,138 3,312 6,899 954 4,323 1,622 2003/2004 1,622 2,223 2,782 6,627 831 4,338 1,458 Total Eastern Europe 1999/2000 4,453 7,569 8,232 20,254 1,289 14,047 4,918 2000/2001 4,918 7,364 8,862 21,144 1,285 14,952 4,907 2001/2002 4,907 7,347 8,146 20,400 1,383 15,014 4,003 2002/2003 4,003 7,462 8,697 20,162 1,998 14,701 3,463 2003/2004 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, 2004 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 Africa 4/ South Africa; Republic of 1999/2000 560 2,685 155 3,400 1,410 1,460 530 2000/2001 530 2,895 260 3,685 1,580 1,650 455 2001/2002 455 2,542 263 3,260 1,235 1,575 450 2002/2003 450 2,931 269 3,650 1,565 1,595 490 2003/2004 490 2,527 253 3,270 1,300 1,600 370 Other Africa 1999/2000 1,464 5,018 4,530 11,012 1,541 7,862 1,609 2000/2001 1,609 5,301 4,688 11,598 1,865 7,954 1,779 2001/2002 1,779 5,481 4,593 11,853 1,803 8,268 1,782 2002/2003 1,782 5,321 5,189 12,292 1,705 8,593 1,994 2003/2004 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 2,139 2000/2001 2,139 8,196 4,948 15,283 3,445 9,604 2,234 2001/2002 2,234 8,023 4,856 15,113 3,038 9,843 2,232 2002/2003 2,232 8,252 5,458 15,942 3,270 10,188 2,484 2003/2004 2,484 8,008 5,697 16,189 3,025 10,395 2,769 Middle East: 5/ Egypt 1999/2000 373 1,390 292 2,055 65 1,940 50 2000/2001 50 1,400 946 2,396 84 2,030 282 2001/2002 282 1,408 1,102 2,792 52 2,290 450 2002/2003 450 1,340 1,100 2,890 0 2,250 640 2003/2004 640 1,365 900 2,905 150 2,255 500 Turkey 1999/2000 1,098 2,348 1 3,447 614 2,050 783 2000/2001 783 2,756 2 3,541 826 1,850 865 2001/2002 865 1,796 1 2,662 378 1,850 434 2002/2003 434 2,345 1 2,780 116 1,900 764 2003/2004 764 1,875 0 2,639 100 1,930 609 Other Middle East 1999/2000 773 909 5,189 6,871 955 5,229 687 2000/2001 687 1,057 5,225 6,969 832 5,356 781 2001/2002 781 1,065 5,444 7,290 1,003 5,527 760 2002/2003 760 1,241 6,214 8,215 1,329 5,700 1,186 2003/2004 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 1,520 2000/2001 1,520 5,213 6,173 12,906 1,742 9,236 1,928 2001/2002 1,928 4,269 6,547 12,744 1,433 9,667 1,644 2002/2003 1,644 4,926 7,315 13,885 1,445 9,850 2,590 2003/2004 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, 2004 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 Asia, Oceania 6/ 7/ India 1999/2000 7,374 20,219 438 28,031 25 17,296 10,710 2000/2001 10,710 20,480 0 31,190 1,360 17,845 11,985 2001/2002 11,985 20,475 100 32,560 1,130 19,760 11,670 2002/2003 11,670 22,100 20 33,790 1,950 20,750 11,090 2003/2004 11,090 19,880 0 30,970 1,300 21,500 8,170 China; Peoples Republic of 1999/2000 2,548 7,525 687 10,760 433 8,476 1,851 2000/2001 1,851 6,849 1,083 9,783 129 8,650 1,004 2001/2002 1,004 8,305 1,375 10,684 460 9,355 869 2002/2003 869 10,637 600 12,106 120 9,916 2,070 2003/2004 2,070 10,070 585 12,725 115 10,263 2,347 Thailand 1999/2000 684 5,721 0 6,405 4,147 1,650 608 2000/2001 608 5,107 0 5,715 3,394 1,750 571 2001/2002 571 6,397 0 6,968 4,157 1,832 979 2002/2003 979 7,303 0 8,282 5,100 1,900 1,282 2003/2004 1,282 7,690 0 8,972 5,800 1,990 1,182 Australia 1999/2000 183 5,448 5 5,636 4,123 995 518 2000/2001 518 4,162 5 4,685 3,056 995 634 2001/2002 634 4,662 5 5,301 3,594 1,200 507 2002/2003 507 5,371 5 5,883 4,220 1,200 463 2003/2004 463 5,114 5 5,582 3,893 1,200 489 continued-- Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 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/ Pakistan 1999/2000 552 2,595 280 3,427 0 3,300 127 2000/2001 127 2,648 1,100 3,875 0 3,450 425 2001/2002 425 3,453 32 3,910 0 3,450 460 2002/2003 460 3,944 0 4,404 107 3,500 797 2003/2004 797 4,037 0 4,834 324 3,550 960 Indonesia 1999/2000 908 1,690 1,949 4,547 17 3,200 1,330 2000/2001 1,330 1,800 1,591 4,721 6 3,300 1,415 2001/2002 1,415 1,725 1,600 4,740 5 3,350 1,385 2002/2003 1,385 1,755 1,650 4,790 0 3,450 1,340 2003/2004 1,340 1,900 1,850 5,090 0 3,600 1,490 Philippines 1999/2000 454 1,620 280 2,354 94 1,930 330 2000/2001 330 1,805 266 2,401 88 1,991 322 2001/2002 322 1,900 109 2,331 142 1,950 239 2002/2003 239 2,160 0 2,399 142 1,980 277 2003/2004 277 2,240 0 2,517 142 2,010 365 Japan 1999/2000 164 795 1,650 2,609 7 2,142 460 2000/2001 460 722 1,486 2,668 10 2,293 365 2001/2002 365 833 1,407 2,605 10 2,277 318 2002/2003 318 870 1,466 2,654 10 2,314 330 2003/2004 330 820 1,402 2,552 10 2,270 272 Other Asia and Oceania 1999/2000 1,563 2,409 6,243 10,215 1,327 7,495 1,393 2000/2001 1,393 2,157 6,970 10,520 1,368 7,884 1,268 2001/2002 1,268 2,411 7,094 10,773 1,518 8,012 1,243 2002/2003 1,243 2,482 7,742 11,467 1,550 8,126 1,791 2003/2004 1,791 2,281 7,385 11,457 1,568 8,222 1,667 Total Asia, Oceania 1999/2000 14,430 48,022 11,532 73,984 10,173 46,484 17,327 2000/2001 17,327 45,730 12,501 75,558 9,411 48,158 17,989 2001/2002 17,989 50,161 11,722 79,872 11,016 51,186 17,670 2002/2003 17,670 56,622 11,483 85,775 13,199 53,136 19,440 2003/2004 19,440 54,032 11,227 84,699 13,152 54,605 16,942 Unrecorded 8/ 1999/2000 5,375 2000/2001-960 2001/2002 3,533 2002/2003 6,555 2003/2004 7,870 World Total 9/ 1999/2000 32,372 136,531 36,073 204,976 41,448 127,395 36,133 2000/2001 36,133 130,495 38,646 205,274 37,686 130,164 37,424 2001/2002 37,424 134,888 37,695 210,007 41,228 134,790 33,989 2002/2003 33,989 147,336 39,169 220,494 45,724 137,725 37,045 2003/2004 37,045 144,635 37,237 218,917 45,107 139,311 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; 1999/2000-745; 2000/01-683; 2001/02-714; 2002/03-683; 2003/04-620. 7/ 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, 2004 31

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 1991 13.39 13.40 13.86 12.90 12.99 13.94 14.73 14.40 13.09 13.03 12.71 12.46 : 13.55 13.28 14.07 12.73 : 13.41 13.71 1992 12.18 11.92 12.19 12.54 12.89 13.41 13.41 12.96 12.29 11.94 11.68 11.26 : 12.10 12.95 12.89 11.63 : 12.39 12.67 1993 11.60 11.97 13.05 13.38 13.39 12.64 12.20 13.05 12.90 13.23 13.15 12.97 : 12.21 13.14 12.72 13.12 : 12.79 12.42 1994 13.14 14.11 15.46 14.92 15.77 16.05 15.54 15.62 15.42 15.46 17.77 18.65 : 14.24 15.58 15.53 17.29 : 15.66 14.62 1995 18.75 18.17 17.45 16.31 17.05 19.16 20.27 20.01 16.58 17.29 17.64 17.21 : 18.12 17.51 18.95 17.38 : 17.99 17.97 1996 17.36 17.90 18.14 18.02 17.79 18.00 16.99 16.81 15.74 14.87 14.09 13.95 : 17.80 17.94 16.51 14.30 : 16.64 17.41 1997 13.87 13.98 14.05 14.19 14.61 14.93 15.07 15.66 14.51 13.58 13.81 13.64 : 13.97 14.58 15.08 13.68 : 14.33 14.48 1998 13.52 12.78 12.23 11.63 12.00 11.80 11.65 11.62 10.05 10.00 10.78 10.97 : 12.84 11.81 11.11 10.58 : 11.59 12.36 1999 10.99 10.50 9.85 8.79 9.13 9.93 9.47 9.04 8.28 7.85 7.73 7.61 : 10.45 9.28 8.93 7.73 : 9.10 9.81 2000 7.70 7.67 7.83 8.66 9.06 10.63 11.38 11.29 11.74 11.76 11.02 10.95 : 7.73 9.45 11.47 11.24 : 9.97 9.10 2001 11.27 10.65 10.26 10.61 11.71 12.68 12.60 12.08 10.66 10.19 11.27 11.52 : 10.73 11.67 11.78 10.99 11.29 11.35 2002 11.88 10.80 10.81 10.09 10.28 10.02 10.23 10.33 9.68 9.72 10.16 10.25 11.16 10.13 10.08 10.04 10.35 10.59 2003 10.64 11.10 10.51 10.14 9.95 9.66 9.84 9.74 8.95 8.39 8.67 9.23 10.75 9.92 9.51 8.76 9.74 10.06 1/ 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 1991 8.88 8.57 9.22 8.55 7.88 9.37 10.26 9.45 9.39 9.10 8.79 9.03 : 8.89 8.60 9.70 8.97 : 9.04 9.26 1992 8.43 8.06 8.22 9.53 9.62 10.52 10.30 9.78 9.28 8.66 8.54 8.15 : 8.24 9.89 9.79 8.45 : 9.09 9.22 1993 8.27 8.61 10.75 11.30 11.87 10.35 9.60 9.30 9.52 10.27 10.10 10.47 : 9.21 11.17 9.47 10.28 : 10.03 9.58 1994 10.29 10.80 11.71 11.10 11.79 12.04 11.73 12.05 12.62 12.75 13.88 14.76 : 10.93 11.64 12.13 13.80 : 12.13 11.25 1995 14.87 14.43 14.58 13.63 13.49 13.99 13.46 13.75 12.72 11.94 11.96 12.40 : 14.63 13.70 13.31 12.10 : 13.44 13.86 1996 12.57 12.97 13.07 12.43 11.94 12.54 12.83 12.33 11.87 11.65 11.29 11.38 : 12.87 12.30 12.34 11.44 : 12.24 12.40 1997 11.13 11.06 11.17 11.50 11.54 12.02 12.13 12.54 12.65 12.86 13.19 12.90 : 11.12 11.69 12.44 12.98 : 12.06 11.67 1998 11.71 11.06 10.66 10.27 10.17 9.33 9.70 9.50 8.21 8.24 8.73 8.59 : 11.14 9.92 9.14 8.52 : 9.68 10.80 1999 8.40 7.05 6.11 5.44 5.83 6.67 6.11 6.39 6.98 6.90 6.54 6.00 : 7.19 5.98 6.49 6.48 : 6.54 7.05 2000 5.64 5.51 5.54 6.48 7.33 8.72 10.18 11.14 10.35 10.96 10.02 10.23 : 5.56 7.51 10.56 10.40 : 8.51 7.53 2001 10.63 10.26 9.64 9.27 9.96 9.80 9.48 8.77 8.60 7.15 7.80 8.02 : 10.18 9.68 8.95 7.66 : 9.12 9.80 2002 7.96 6.81 7.27 7.12 7.33 7.07 8.02 7.86 8.54 8.84 8.87 8.81 : 7.35 7.17 8.14 8.84 : 7.88 7.58 2003 8.56 9.14 8.50 7.92 7.41 6.85 7.18 7.30 6.70 6.74 6.83 6.95 : 8.73 7.39 7.06 6.84 : 7.51 8.01 1/ 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, 2004 32

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 1991 21.86 21.42 21.46 21.23 21.29 21.42 21.25 21.83 22.06 21.76 21.75 21.50 : 21.58 21.31 21.71 21.67 : 21.57 21.89 1992 21.38 21.56 21.36 21.38 21.04 20.92 21.10 21.34 21.55 21.61 21.39 21.11 : 21.43 21.11 21.33 21.37 : 21.31 21.39 1993 20.76 21.16 21.56 21.76 21.36 21.42 21.89 21.85 21.97 21.80 21.87 22.00 : 21.16 21.51 21.90 21.89 : 21.62 21.49 1994 22.00 21.95 21.95 22.08 22.18 22.44 22.72 21.84 21.78 21.58 21.57 22.35 : 21.97 22.23 22.11 21.83 : 22.04 22.05 1995 22.65 22.69 22.46 22.76 23.10 23.09 24.47 23.18 23.21 22.67 22.60 22.63 : 22.60 22.98 23.62 22.63 : 22.96 22.76 1996 22.39 22.68 22.57 22.71 22.62 22.48 21.80 22.51 22.38 22.37 22.12 22.14 : 22.55 22.60 22.23 22.21 : 22.40 22.50 1997 21.88 22.07 21.81 21.79 21.70 21.62 22.04 22.21 22.30 22.27 21.90 21.93 : 21.92 21.70 22.18 22.03 : 21.96 22.00 1998 21.85 21.79 21.74 22.14 22.31 22.42 22.66 22.19 21.92 21.67 21.83 22.19 : 21.79 22.29 22.26 21.90 : 22.06 22.09 1999 22.41 22.38 22.55 22.57 22.65 22.61 22.61 21.24 20.10 19.50 17.45 17.87 : 22.45 22.61 21.32 18.27 : 21.16 22.07 2000 17.70 17.24 18.46 19.43 19.12 19.31 17.64 18.12 18.97 21.15 21.39 20.56 : 17.80 19.29 18.24 21.03 : 19.09 18.40 2001 20.81 21.18 21.40 21.51 21.19 21.04 20.64 21.10 20.87 20.90 21.19 21.43 : 21.13 21.25 20.87 21.17 21.11 21.07 2002 21.03 20.69 19.92 19.73 19.52 19.93 20.86 20.91 21.65 21.94 22.22 22.03 20.55 19.73 21.14 22.06 20.87 20.65 2003 21.62 21.91 22.14 21.87 21.80 21.62 21.32 21.26 21.34 20.92 20.91 20.37 21.89 21.76 21.31 20.73 21.42 21.76 1/ 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 21.51 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 (www.nybot.com) 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 1991 26.88 26.50 26.50 26.13 26.00 25.75 25.50 25.50 25.00 24.94 24.60 24.50 : 26.63 25.96 25.33 24.68 : 25.65 26.57 1992 25.40 26.50 26.50 26.50 26.40 26.00 25.00 25.00 25.00 24.90 24.13 23.90 : 26.13 26.30 25.00 24.31 : 25.44 25.53 1993 23.25 23.00 23.00 23.50 23.50 23.50 25.50 27.75 27.50 27.50 27.25 26.50 : 23.08 23.50 26.92 27.08 : 25.15 24.45 1994 25.75 25.50 25.50 24.50 24.75 25.25 25.00 25.00 24.70 25.00 25.38 25.50 : 25.58 24.83 24.90 25.29 : 25.15 25.60 1995 25.50 25.50 25.50 25.50 25.13 25.10 24.75 24.75 25.50 25.75 28.13 28.85 : 25.50 25.24 25.00 27.58 : 25.83 25.26 1996 28.69 29.00 29.50 29.50 29.70 29.50 29.50 29.00 29.00 29.00 29.00 29.00 : 29.06 29.57 29.17 29.00 : 29.20 28.84 1997 29.00 29.00 28.13 28.00 28.00 27.50 27.00 26.65 26.38 24.90 25.00 25.50 : 28.71 27.83 26.68 25.13 : 27.09 28.06 1998 25.50 25.50 25.50 25.50 26.00 26.00 26.00 26.00 26.50 26.90 27.00 27.00 : 25.50 25.83 26.17 26.97 : 26.12 25.66 1999 27.20 27.13 27.00 27.00 27.00 27.00 27.00 27.00 27.00 26.00 26.00 25.20 : 27.11 27.00 27.00 25.73 : 26.71 27.02 2000 23.38 22.25 21.50 21.00 19.75 19.00 19.00 19.00 20.70 21.25 21.00 21.80 : 22.38 19.92 19.57 21.35 : 20.80 21.90 2001 23.13 22.75 22.00 20.50 21.38 21.90 22.50 22.50 24.63 25.75 26.20 26.50 : 22.63 21.26 23.21 26.15 : 23.31 22.11 2002 26.75 26.00 25.95 24.63 24.50 24.00 24.00 25.40 26.25 26.75 27.40 27.88 26.23 24.38 25.22 27.34 25.79 25.49 2003 27.80 26.50 27.13 27.63 28.00 28.00 27.63 25.50 24.00 24.70 23.94 23.63 27.14 27.88 25.71 24.09 26.21 27.02 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, 2004 33

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 1991 43.40 43.00 43.40 43.30 43.10 43.20 43.50 42.80 42.20 42.00 41.90 41.80 : 43.27 43.20 42.83 41.90 : 42.80 43.08 1992 42.50 42.40 41.90 41.70 41.70 41.50 41.50 41.10 41.00 41.20 41.20 40.60 : 42.27 41.63 41.20 41.00 : 41.53 41.75 1993 41.20 41.00 40.60 40.80 40.80 40.30 40.20 40.60 40.40 40.50 40.30 39.80 : 40.93 40.63 40.40 40.20 : 40.54 40.74 1994 40.70 40.50 40.10 39.90 40.10 39.70 40.00 39.70 40.30 40.20 39.50 39.20 : 40.43 39.90 40.00 39.63 : 39.99 40.13 1995 39.70 39.90 39.80 39.40 39.70 39.50 39.70 39.60 39.80 40.40 40.70 39.80 : 39.80 39.53 39.70 40.30 : 39.83 39.67 1996 40.50 40.30 40.60 40.40 41.50 41.80 42.40 42.80 42.60 43.20 42.60 42.80 : 40.47 41.23 42.60 42.87 : 41.79 41.15 1997 43.40 42.90 43.10 43.50 43.40 43.60 43.30 43.60 43.60 43.00 42.90 42.80 : 43.13 43.50 43.50 42.90 : 43.26 43.25 1998 43.00 42.90 43.30 43.10 42.80 43.10 43.20 43.60 43.20 42.30 42.50 42.70 : 43.07 43.00 43.33 42.50 : 42.98 43.08 1999 43.60 43.00 43.70 43.20 43.60 43.10 43.20 43.10 43.70 43.80 42.60 42.60 : 43.43 43.30 43.33 43.00 : 43.27 43.14 2000 43.70 43.20 42.90 41.40 42.40 42.80 42.50 42.40 42.40 42.50 41.30 41.40 : 43.27 42.20 42.43 41.73 : 42.41 42.73 2001 42.80 43.50 43.70 42.90 43.80 43.50 44.30 43.30 44.20 44.00 42.50 42.50 : 43.33 43.40 43.93 43.00 : 43.42 43.10 2002 44.10 43.70 42.60 44.40 42.70 43.00 43.30 43.30 43.70 42.40 41.90 42.10 43.47 43.37 43.43 42.13 : 43.10 43.32 2003 43.00 42.70 42.70 42.70 43.10 42.90 43.10 43.50 42.60 42.50 41.10 42.20 42.80 42.90 43.07 41.93 42.68 42.73 Source: Bureau of Labor Statistics. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 34

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 1991/92 443.0 15.0 428.0 3.4 34.9 14,937 1,832 12.27 3.62 1992/93 443.0 17.0 426.0 3.8 33.2 14,143 1,710 12.09 3.15 1993/94 444.0 19.0 425.0 4.3 34.1 14,493 1,771 12.22 4.17 1994/95 444.0 21.0 423.0 4.7 33.6 14,213 1,726 12.14 4.08 1995/96 437.0 20.0 417.0 4.6 34.6 14,428 1,771 12.28 4.25 1996/97 438.0 21.0 417.0 4.8 33.1 13,803 1,679 12.17 4.03 1997/98 440.0 19.0 421.0 4.3 36.9 15,535 1,924 12.38 4.57 1998/99 447.0 21.0 426.0 4.7 40.1 17,083 2,132 12.48 5.00 1999/00 460.0 17.0 443.0 3.7 35.0 15,505 1,966 12.68 4.44 2000/01 445.0 18.0 436.0 4.0 37.5 16,350 2,057 12.58 4.72 2001/02 465.0 20.0 445.0 4.3 35.1 15,620 1,980 12.68 4.45 2002/03 461.0 19.0 442.0 4.1 38.3 16,929 2,129 12.58 4.82 2003/04 441.0 20.0 421.0 4.5 39.5 16,630 2,166 13.02 5.14 Hawaii 1991 74.0 6.6 67.4 8.9 86.9 5,857 724 12.36 10.74 1992 67.9 6.2 61.7 9.1 88.0 5,430 649 11.95 10.52 1993 69.9 5.1 64.8 7.3 85.0 5,508 677 12.29 10.44 1994 69.3 5.0 64.3 7.2 81.9 5,266 657 12.47 10.21 1995 53.0 4.5 48.5 8.5 81.5 3,953 491 12.42 10.12 1996 46.0 3.1 42.9 6.7 82.6 3,544 432 12.18 10.06 1997 34.2 2.2 32.0 6.4 91.4 2,925 363 12.41 11.34 1998 32.5 2.2 30.3 6.8 90.0 2,727 354 12.98 11.68 1999 37.3 1.9 35.4 5.1 81.7 2,892 368 12.71 10.38 2000 32.0 1.8 30.2 5.6 78.3 2,365 301 12.73 9.97 2001 20.8 1.5 19.3 7.2 97.3 1,878 246 13.11 12.76 2002 22.7 1.4 21.3 6.2 99.0 2,109 287 13.62 13.49 2003 22.0 1.5 20.5 6.8 99.2 2,034 -- -- -- Louisiana 1991/92 345.0 24.0 321.0 7.0 22.1 7,090 763 10.77 2.38 1992/93 375.0 30.0 345.0 8.0 23.2 8,010 876 10.93 2.54 1993/94 390.0 30.0 360.0 7.7 22.8 8,220 893 10.86 2.48 1994/95 380.0 28.0 352.0 7.4 24.4 8,589 1,019 11.86 2.89 1995/96 400.0 32.0 368.0 8.0 25.6 9,421 1,057 11.22 2.87 1996/97 370.0 35.0 335.0 9.5 27.9 9,347 1,055 11.28 3.15 1997/98 410.0 30.0 380.0 7.3 28.2 10,716 1,262 11.78 3.32 1998/99 435.0 35.0 400.0 8.0 29.7 11,880 1,327 11.17 3.32 1999/00 465.0 30.0 435.0 6.5 32.7 14,225 1,683 11.83 3.87 2000/01 500.0 35.0 465.0 7.0 29.7 13,811 1,585 11.48 3.41 2001/02 495.0 35.0 460.0 7.1 29.0 13,340 1,580 11.85 3.44 2002/03 495.0 30.0 465.0 6.1 28.3 13,160 1,369 10.40 2.94 2003/04 490.0 40.0 450.0 8.2 27.0 12,150 1,472 12.12 3.27 continued-- Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 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 Texas 1991/92 34.9 1.7 33.2 4.9 32.4 1,076 109 10.16 3.29 1992/93 39.3 1.6 37.7 4.1 34.2 1,290 138 10.67 3.65 1993/94 44.4 0.9 43.5 2.0 32.5 1,414 146 10.35 3.37 1994/95 43.5 1.1 42.4 2.5 31.5 1,336 144 10.78 3.40 1995/96 42.3 1.1 41.2 2.6 32.4 1,335 134 10.04 3.25 1996/97 34.9 0.3 34.6 0.9 28.7 993 91 9.16 2.63 1997/98 29.8 2.5 27.3 8.4 30.3 827 80 9.62 2.91 1998/99 32.6 0.6 32.0 1.8 32.9 1,053 106 10.08 3.32 1999/00 31.0 3.0 28.0 9.7 34.1 955 105 11.01 3.75 2000/01 46.3 0.8 45.5 1.7 38.8 1,765 206 11.68 4.53 2001/02 47.0 1.0 46.0 2.1 42.1 1,937 174 8.97 3.78 2002/03 44.5 0.9 43.6 2.0 39.1 1,705 191 11.20 4.38 2003/04 43.8 1.4 42.4 3.2 37.0 1,569 182 11.60 4.29 Total cane 1991/92 896.9 47.3 849.6 5.3 34.1 28,960 3,429 11.84 4.04 1992/93 925.2 54.8 870.4 5.9 33.2 28,873 3,372 11.68 3.87 1993/94 948.3 55.0 893.3 5.8 33.2 29,635 3,487 11.76 3.90 1994/95 936.8 55.1 881.7 5.9 33.3 29,404 3,545 12.06 4.02 1995/96 932.3 57.6 874.7 6.2 33.3 29,137 3,454 11.85 3.95 1996/97 888.9 59.4 829.5 6.7 33.4 27,687 3,256 11.76 3.93 1997/98 914.0 53.7 860.3 5.9 34.9 30,003 3,628 12.09 4.22 1998/99 947.1 58.8 888.3 6.2 36.9 32,743 3,919 11.97 4.41 1999/00 993.3 51.9 941.4 5.2 35.7 33,577 4,122 12.27 4.38 2000/01 1,023.3 55.6 976.7 5.4 35.1 34,291 4,149 12.10 4.25 2001/02 1,027.8 57.5 970.3 5.6 33.8 32,775 3,980 12.14 4.10 2002/03 1,023.2 51.3 971.9 5.0 34.9 33,903 3,976 11.73 4.09 2003/04 996.8 62.9 933.9 6.3 34.7 32,383 -- -- -- ---= 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, 2004 36

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 1991 1,427 1,387 28,203 20.3 3,845 13.6 2.77 1992 1,437 1,412 29,143 20.6 4,392 15.1 3.11 1993 1,438 1,409 26,249 18.6 4,090 15.6 2.90 1994 1,476 1,443 31,853 22.1 4,493 14.1 3.11 1995 1,445 1,420 28,065 19.8 3,916 14.0 2.76 1996 1,368 1,323 26,680 20.2 4,013 15.0 3.03 1997 1,459 1,428 29,886 20.9 4,389 14.7 3.07 1998 1,498 1,451 32,499 22.4 4,423 13.6 3.05 1999 1,561 1,527 33,420 21.9 4,956 14.8 3.24 2000 1,564 1,373 32,541 23.7 4,680 14.4 3.41 2001 1,371 1,243 25,764 20.7 3,914 15.2 3.15 2002 1,427 1,361 27,718 20.4 4,415 15.9 3.24 2003 1,365 1,348 30,605 22.7 4,852 15.9 3.60 NA = not available; 1/ Forecast Source: USDA Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 37

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: 1992 301 284 315 312 283 341 344 356 375 343 357 355 : 901 935 1,075 1,055 : 3,902 3,966 1993 303 287 397 299 328 367 358 372 367 346 325 338 : 988 994 1,097 1,008 : 4,134 4,087 1994 312 313 370 303 338 406 360 406 437 338 304 282 : 995 1,047 1,204 924 : 4,254 4,170 1995 301 311 378 311 356 399 384 450 465 404 395 331 : 989 1,066 1,300 1,131 : 4,279 4,486 1996 316 342 361 343 338 325 350 335 300 333 315 267 : 1,018 1,006 984 915 : 4,139 3,923 1997 280 272 315 312 326 332 351 373 428 375 316 317 : 867 970 1,152 1,009 : 3,903 3,997 1998 324 316 362 344 342 401 393 388 409 392 334 308 : 1,002 1,087 1,190 1,034 : 4,288 4,313 1999 319 325 374 346 361 417 400 427 416 438 392 321 : 1,018 1,124 1,244 1,151 : 4,419 4,536 2000 320 340 385 341 393 384 348 411 392 412 378 329 : 1,045 1,118 1,152 1,119 : 4,465 4,433 2001 366 346 401 375 405 403 414 450 408 429 373 311 : 1,113 1,183 1,272 1,112 : 4,686 4,680 2002 349 315 347 340 375 332 369 365 488 368 342 300 1,012 1,047 1,223 1,010 4,394 4,291 2003 315 307 341 338 338 365 380 366 760 192 219 962 1,041 1,506 4,518 Cane sugar for domestic consumption: 1992 324 339 406 406 375 455 417 419 468 479 371 349 : 1,069 1,236 1,303 1,200 : 4,820 4,808 1993 311 339 391 387 351 423 422 441 469 427 424 395 : 1,042 1,161 1,332 1,246 : 4,734 4,781 1994 332 358 422 361 400 448 411 427 473 443 434 420 : 1,112 1,209 1,310 1,298 : 4,877 4,929 1995 340 332 432 380 424 438 369 444 423 431 413 381 : 1,104 1,243 1,236 1,226 : 4,880 4,808 1996 353 376 443 425 452 471 463 488 565 547 500 456 : 1,172 1,349 1,515 1,504 : 5,262 5,539 1997 397 396 481 444 474 509 462 476 500 525 459 431 : 1,274 1,427 1,437 1,416 : 5,641 5,553 1998 369 391 470 430 429 481 432 438 503 486 467 451 : 1,230 1,339 1,374 1,404 : 5,358 5,347 1999 355 379 453 452 500 476 433 490 485 483 481 433 : 1,186 1,429 1,407 1,396 : 5,427 5,419 2000 383 404 484 425 452 488 455 530 471 534 481 398 : 1,272 1,365 1,456 1,414 : 5,490 5,508 2001 410 371 470 413 431 458 419 446 417 487 467 384 : 1,251 1,302 1,282 1,338 : 5,248 5,172 2002 392 378 437 424 458 490 472 486 549 468 444 407 1,208 1,373 1,507 1,320 5,424 5,407 2003 372 377 467 434 408 475 421 488 415 475 485 1,216 1,317 1,324 5,177 Importers direct consumption: 1992 6 6 3 3 2 2 2 7 3 6 7 6 : 15 7 12 19 : 49 52 1993 4 2 3 2 5 9 1 2 1 9 6 8 : 10 17 3 23 : 48 52 1994 5 3 6 1 4 4 5 5 7 10 15 12 : 14 9 18 38 : 63 78 1995 9 1 1 2 0 0 1 1 4 17 5 0 : 12 3 6 22 : 59 44 1996 0 0 0 0 0 0 0 1 19 10 1 1 : 1 1 20 12 : 44 33 1997 1 0 1 2 1 1 1 0 1 15 2 2 : 2 4 2 19 : 20 27 1998 0 1 0 0 1 1 1 0 0 13 5 1 : 1 2 1 19 : 23 24 1999 3 1 0 0 0 0 0 0 4 27 3 4 : 4 0 4 33 : 28 41 2000 0 0 1 0 0 0 0 0 3 26 4 1 : 1 0 3 31 : 38 36 2001 5 1 0 0 0 0 3 21 3 6 10 8 : 6 1 27 24 : 65 58 2002 3 1 4 7 1 12 3 6 14 36 19 2 8 20 24 58 76 109 2003 3 1 1 1 0 1 1 1 7 25 17 5 2 9 73 Total sugar for domestic consumption: 1992 631 629 725 720 660 798 763 782 846 828 736 710 : 1,985 2,178 2,390 2,273 : 8,772 8,826 1993 619 629 791 688 685 799 782 815 836 783 755 740 : 2,039 2,172 2,432 2,277 : 8,916 8,920 1994 649 674 798 665 742 857 776 838 918 792 754 714 : 2,121 2,265 2,532 2,260 : 9,195 9,177 1995 651 644 811 694 780 837 755 894 892 853 813 713 : 2,105 2,311 2,542 2,379 : 9,218 9,337 1996 670 718 804 769 790 796 813 823 883 891 816 724 : 2,191 2,355 2,519 2,430 : 9,445 9,496 1997 678 668 797 758 801 841 813 849 928 915 778 750 : 2,143 2,401 2,591 2,443 : 9,565 9,578 1998 694 707 832 774 772 883 826 826 913 892 806 760 : 2,233 2,428 2,565 2,458 : 9,669 9,684 1999 676 704 827 798 861 894 833 916 905 947 876 757 : 2,208 2,553 2,655 2,580 : 9,873 9,996 2000 703 745 870 766 845 872 804 941 867 973 863 728 : 2,318 2,484 2,611 2,564 : 9,993 9,977 2001 781 718 871 788 837 861 835 917 828 922 849 703 : 2,370 2,486 2,580 2,474 : 10,000 9,911 2002 744 695 788 771 834 834 844 858 1,051 873 805 709 2,227 2,439 2,754 2,388 9,894 9,808 2003 689 685 809 772 746 841 802 856 1,181 692 720 2,183 2,360 2,839 9,769 continued- - Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 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 Reexported in products: 1992 8 6 5 6 10 9 6 8 8 10 8 7 : 19 26 23 26 : 86 93 1993 10 4 9 7 7 12 14 22 20 8 8 7 : 23 26 57 24 : 132 129 1994 7 7 7 9 15 15 10 17 17 12 11 5 : 20 39 44 28 : 127 131 1995 3 7 7 8 4 7 15 18 5 6 8 7 : 18 18 39 21 : 103 96 1996 5 5 10 14 8 8 8 13 11 9 7 6 : 20 30 32 22 : 104 104 1997 32 30 6 6 7 10 12 16 17 7 6 8 : 68 22 45 21 : 157 156 1998 6 9 9 12 10 10 14 15 16 18 15 11 : 24 32 46 44 : 123 146 1999 26 19 12 14 11 10 15 10 7 9 5 7 : 58 35 32 21 : 169 145 2000 7 7 7 7 8 7 6 11 5 6 6 7 : 21 22 22 18 : 86 84 2001 8 5 8 9 10 10 11 11 8 10 16 13 : 21 29 30 40 : 98 120 2002 15 13 11 12 12 11 12 14 15 17 12 14 39 35 42 43 156 158 2003 16 13 14 14 15 20 19 15 13 16 10 44 49 47 183 Polyhydric alcohol and livestock feed use: 1992 1 1 1 2 1 1 2 2 2 2 1 1 : 4 4 5 4 : 17 17 1993 2 2 1 1 1 1 1 1 1 1 1 1 : 5 4 3 2 : 15 14 1994 1 1 1 1 1 1 1 1 1 1 1 1 : 4 3 4 4 : 13 14 1995 1 1 2 1 2 2 1 2 2 2 1 1 : 4 5 4 4 : 17 17 1996 1 1 2 1 2 2 2 2 2 2 1 1 : 4 5 5 5 : 18 18 1997 1 1 1 2 2 2 2 2 3 2 1 2 : 4 6 6 5 : 21 21 1998 1 1 2 2 2 1 2 2 2 2 2 2 : 4 5 5 6 : 20 21 1999 1 2 2 2 2 2 2 2 2 2 2 3 : 5 6 6 8 : 24 12 2000 3 3 3 3 2 2 3 2 3 2 3 2 : 9 8 7 7 : 32 16 2001 3 3 3 3 4 3 3 4 10 4 3 2 : 8 10 17 9 : 42 18 2002 3 2 2 2 3 4 4 2 2 2 2 1 7 8 8 5 33 15 2003 2 2 2 2 2 2 2 2 3 2 3 6 7 7 24 Total U.S. sugar deliveries 1/: 1992 640 637 731 728 671 809 771 792 856 840 745 718 : 2,007 2,208 2,418 2,303 : 8,875 8,937 1993 630 635 801 697 693 812 797 838 857 792 763 748 : 2,067 2,201 2,492 2,303 : 9,063 9,063 1994 657 682 806 675 758 873 787 856 936 804 767 720 : 2,145 2,307 2,579 2,291 : 9,334 9,322 1995 655 653 820 703 786 846 772 914 899 861 823 721 : 2,127 2,334 2,585 2,405 : 9,337 9,451 1996 676 724 815 785 800 806 822 838 896 901 824 731 : 2,215 2,390 2,557 2,457 : 9,567 9,619 1997 712 699 804 766 810 854 827 867 948 924 785 760 : 2,215 2,429 2,641 2,469 : 9,742 9,755 1998 701 718 843 787 784 894 843 843 931 912 823 773 : 2,261 2,465 2,616 2,508 : 9,812 9,851 1999 704 725 842 814 875 906 850 928 915 958 883 767 : 2,271 2,594 2,693 2,609 : 10,066 10,167 2000 713 755 880 776 855 881 813 954 875 981 871 737 : 2,348 2,513 2,641 2,589 : 10,111 10,091 2001 792 726 882 800 851 874 849 932 847 936 869 718 : 2,399 2,524 2,628 2,524 : 10,140 10,075 2002 761 710 801 786 848 849 860 874 1,069 891 819 724 2,272 2,483 2,803 2,435 10,082 9,994 2003 707 701 825 788 764 863 823 873 1,197 710 733 2,233 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 1993. 1/ 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, 2004 39

Table 16--U.S. sugar: supply and use, by fiscal year /1 Items 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 Projection Jan. 2004 1,000 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 91 80 106 105 206 174 191 182 Hawaii 340 350 384 318 241 251 276 276 Puerto Rico 27 16 3 4 0 0 0 0 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 493 349 386 388 238 296 488 325 Non-program imports 4 85 182 124 76 81 32 35 Statistical adjustments 3 0 0 0 0 0 0 0 0 Total Supply 11,471 11,671 11,878 12,317 12,576 11,615 11,526 11,836 Total exports 3 211 179 230 124 141 137 142 160 Quota-exempt for reexport 211 179 230 124 141 137 142 160 Other exports 0 0 0 0 0 0 0 0 CCC disposal, for export 0 0 0 0 0 0 0 0 Statistical difference 6 0 0 0 0 0 0 0 0 Miscellaneous 30-2 -58-144 125-31 106 0 CCC disposal, for domestic non-food use 0 0 0 0 10 0 0 0 Refining loss adjustment 0 0 0 0 0 0 0 0 Statistical adjustment 7 30-2 -58-144 115-31 106 0 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 157 123 169 86 98 156 183 200 Transfer to polyhydric alcohol, feed 21 20 25 32 34 33 24 25 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 0 0 0 297 784 212 Percent Stocks-to-use ratio 14.91 16.80 16.01 21.96 20.97 14.00 12.75 20.34 NOTE: Numbers may not add due to rounding. 1. Fiscal year beginning October 1. 2. 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 1992. 4. 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 1.07. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 40

Table 17--U.S. high fructose corn syrup (HFCS) deliveries, quarterly, by fiscal and calendar year 1/ Quarter and Year 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2/ 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 1992 51.8 0.0 51.8 11.0 46.1 0.0 20.0 36.9 1.6 45.8 16.0 4.2 175 10.9 1993 54.5 0.0 54.5 11.0 48.5 0.0 20.0 38.8 1.7 48.2 16.0 4.2 184 11.5 1994 56.2 0.0 56.2 11.0 50.0 0.0 20.0 40.0 1.8 49.7 16.0 4.2 189 11.8 1995 57.6 0.0 57.6 11.0 51.3 0.0 20.0 41.0 1.8 51.0 16.0 4.2 194 12.1 1996 57.8 0.0 57.8 11.0 51.4 0.0 20.0 41.1 1.8 51.1 16.0 4.2 195 12.2 1997 60.4 0.0 60.4 11.0 53.7 0.0 20.0 43.0 1.9 53.4 16.0 4.2 204 12.7 1998 61.9 0.0 61.9 11.0 55.1 0.0 20.0 44.1 1.9 54.8 16.0 4.2 209 13.0 1999 63.7 0.0 63.7 11.0 56.7 0.0 20.0 45.4 2.0 56.4 16.0 4.2 215 13.4 2000 62.7 0.0 62.7 11.0 55.8 0.0 20.0 44.7 2.0 55.5 16.0 4.2 211 13.2 2001 62.5 0.0 62.5 11.0 55.7 0.0 20.0 44.5 2.0 55.3 16.0 4.2 211 13.2 2002 62.7 0.0 62.7 11.0 55.8 0.0 20.0 44.7 2.0 55.5 16.0 4.2 211 13.2 1/ 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, 2004 41

Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-239/January 29, 2004 42