• America is set to make a record amount of sugar in 2019/20.
  • This will probably mean Mexican sugar access to the American market will be the lowest 10 years.
  • Meanwhile, we think it’s unlikely the US will receive all of the sugar imports it thinks it will in the next 7 weeks.

Record Production, Thanks To Cane 

  • The US Department of Agriculture (USDA) expects American sugar production to hit record levels in 2019/20, at 9.3m short tons raw value (strv).

American Sugar Production by Season 

  • This is because sugar cane area planted is expected to be the largest in 14 years.

American Sugar Cane Acreage Planted 

  • Cane yields are also expected to be close to record levels, and have increased significantly across recent years.

American Sugar Yields per Acre Have Been Increasing

  • The USDA expects beet area and yields to remain constant.

 

  • A record domestic crop reduces the need for Mexican imports to achieve the USDA’s magical 13.5% closing stock-to-use ratio in September 2020.
  • Currently the USDA forecast Mexican arrivals at 880k tonnes (969k strv), which is 3% lower than this year’s arrivals.
  • This would be the lowest volume of Mexican sugar shipments to the USA in 10 years.

Mexican Sugar Shipments to the USA 

TRQ Imports to Disappoint 

  • The US Department of Agriculture expects trading partners to ship 1.6m strv of preferential duty (“TRQ”) raw sugar to America in the season that finishes on September 30th.
  • Usually, you’d expect suppliers to meet their US TRQ trading commitments because the US market trades at a significant premium to the world market.
  • To date, 853 mtrv has entered the USA under TRQ, meaning the USDA expects another 225k strv to arrive in the next 7 weeks.
  • We think they will be disappointed.
  • Some of the outstanding volumes are too small to justify shipping; for example, Jamaica’s quota is just 1,704mt of raws.
  • Perhaps the biggest shortfall is expected to be in the Philippines.
  • Domestic prices there are $1,100/mt and the Philippines has just authorised sugar imports, so shipments to the USA are unlikely to happen.

August WASDE Release  

 

Vincent O’Rourke

Vincent began his career at CZ in 2016 as an analyst in the London Office, focusing on raw sugar flows and the Refineries in North Africa and the Middle East. Since 2019 Vincent has moved to the Miami office, leading the Americas analysis (excluding Brazil) and implementing the new data capture and database processes. Vincent graduated from Edinburgh with a master’s in theology in 2015 and completed a Masters in Emerging Economies from King’s London University in 2016

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