- 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
