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  • US sugar consumption could fall by 2.5% this year due to the impact of the coronavirus.
  • A significant decrease in consumption over 2020 and 2021 would reduce the need for imports from the world market.
  • Sugar production should remain mostly unhindered, however, as the food industry remains a vital one.

How Will US Consumption Cope Against COVID-19?  

  • Whilst the short-term rush to stockpile food is beneficial for consumption, the long-term impact is harder to measure.
  • We are seeing a surge in retail demand for sugar as people fill their cupboards with basic goods and snacks. However, the long-term impact of a sustained period of self-isolation could be destructive for US demand.
  • The sugary beverage industry is at particular risk; this will have a knock-on effect on the hospitality industry.
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  • Some major sources of sugar consumption could receive a boost; most notably bakeries and canned goods.
  • But beverages, confectionary and dairy products will likely see a sustained shortfall in consumption.
  • The most obvious reason for this is that people are not traveling or going out to bars, restaurants or cinemas.
  • On top of this, the economic impact of the quarantine could see a more sustained loss of consumption.

Loss of Annual US Consumption After 2008 Recession by Sector

  • Overall sugar consumption fell by 1.2% year-on-year (YoY) after the 2008 recession.
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  • The effects of prolonged social distancing could mean sugar consumption reduces by even more than this in the next 12 months.
  • We think that up to 2.5% of US sugar consumption could be lost in 2020/21 due to the impact of the coronavirus.
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What Impact Could This Have?  

  • The US is a controlled market with various import mechanisms in place to ensure the supply is adequate but not overwhelming.
  • Adequate supply is defined as 13.5% stocks-to-use (STU) on the WASDE monthly balance sheet release.
  • A fall in demand of 2.5% would reduce the need for imports, but this would not mean that imports are not required.

The WASDE Scenario Planner  

  • Our WASDE Scenario Planner allows you to adjust different variables and see how they affect the WASDE balance.
    • These variables include beet and cane production, the consumption number, Mexican imports and any other imports.
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  • If consumption were to fall 11.96m Short Tons, Raw Value (STRV), then the USDA would project a 10% STU ratio.
  • This would mean further imports of around 435k tons would be necessary (as is currently expected).
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  • However, it is unlikely the USDA will be able to estimate the impact on supply until later on in the season.
  • This could mean the 20/21 season opens with larger stocks than expected, reducing the need for imports that season.
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  • This scenario assumes a recovery in the domestic beet and cane crops, as well as the opening stocks remaining consistent.
  • If this were to be the case, import needs from Mexico would reduce to 799k tonnes.
  • The likelihood for any further import measures this season is minimal as production recovers and demand weakens.

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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