Bumper US Beet Crop Prospects Weigh on Prices

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Insight Focus

Strong US sugar production numbers and high crop ratings are creating a bearish sentiment in the market. But there are some pockets of risk, including adverse weather, and overestimation of the crop by the USDA and potential production issues in Brazil.

Strong Production Pressures Prices

Weakness persisted in the bulk refined sugar market during the week ended July 26. Spot and forward prices were left unchanged, but the market tone was soft, notably for 2025 beet sugar prices, amid prospects for a bumper 2024 sugar beet crop.

Some price pressure spilled from world (No. 11) raw sugar prices, which fell to 20-month lows. But No. 11 futures prices turned sharply higher on July 25 after first-half July sugar production in Brazil was reported below expectations.

The beet sugar market remained soft for 2024-25, but prices had not declined further from a week earlier, according to trade sources. Some sales were noted around 45¢/lb FOB Midwest, but sources did not see those as representative of the market that they thought mostly was around 47¢/lb or above. One processor in particular had been aggressively selling at lower prices amid good beet crop prospects, which was thought to have accounted for the mid-40¢/lb prices.

One beet processor remained out of the 2024-25 market until September, except for retail and private label sugar. Most others appeared to be selling at a steady pace amid favourable crop prospects.

Refined cane sugar sales progressed for 2024-25 with price offers unchanged.

Production Revision Could Cause Correction

The only potentially bullish factors in the market currently are ideas that the US Department of Agriculture’s 2024-25 beet sugar forecast is too high, and weather uncertainty, either a frost in beet country or a hurricane in cane areas.

Sugar beet condition ratings as of July 21 were unchanged to mostly higher from a week earlier. Despite the high beet crop ratings, sources suggested spot damage from hail or other weather issues will keep the crop in some areas from record production, although they still expect an above-average crop for the most part.

Louisiana’s sugar cane crop was rated the highest for the date since 2016.

Spot beet and refined cane sugar values were unchanged. Sales were slow, and most processors still had some spot sugar available. Early harvest will contribute to new crop supplies available for the current marketing year before October 1. The USDA forecasts August-September beet sugar production from the 2024 beet crop at 644,000 tons (584,000 tonnes), down from 663,000 tons (601,000 tonnes) last year.

Deliveries of contracted sugar for 2023-24 continued at a good pace with traders expecting a strong third quarter. After a slow start to deliveries in the first half of the marketing year, shipments have been at expectations or above in some cases, with cane sugar deliveries generally above year-ago levels and beet sugar deliveries below on a monthly basis.

The USDA forecasts total sugar deliveries for food use in 2023-24 down 1% from 2022-23 and remaining flat into 2024-25. October-May deliveries were down 2.5% from the same period a year earlier.