482 words / 2 minute reading time
- The latest WASDE release has reduced Mexican import expectations to 1.2m STRV (Short Tons Raw Value).
- However, using this release for the final Mexican quota would set it at 1.9m STRV.
- This means the United States Department of Agriculture (USDA) is expecting to import 700k tonnes from somewhere else, but it remains unclear how it will do this.
March WASDE Release
- The WASDE is an estimate of supply and demand in the US market, so whilst the quota remains at 1.66m STRV, the USDA only expects 1.12 to be shipped.
- With these current assumptions, the stocks-to-use (STU) ratio will fall to 7.2%.
- This means the US must import sugar from elsewhere.
- It is not entirely clear how the USDA will manage to increase this season’s supply at this moment.
- The USDA has made one change to imports, by increasing the proportion of refined sugar Mexico can ship to the US.
The USDA Prioritise Refined Imports from Mexico
- The Mexican quota to the US usually works to a 70/30 split of raw sugar and refined sugar respectively.
- However, the USDA have increased the refined sugar quota by 200k short tons after releasing the WASDE.
- This has been done in attempt to ease the current tightness of the US’ refined sugar market.
- The USDA is now asking Mexico to supply more refined sugar than it has done for the last two seasons combined.
- By allocating more refined quota to Mexico, the USDA is acknowledging that it is an area of need in the market.
- However, if Mexico only ships 1.1m tonnes, the refined sugar supply is still greatly jeopardised.
- This will leave little option but to open an emergency refined sugar quota to ensure the refined sugar required is imported.
- Whilst considering the current WASDE supply estimates, an additional 775k tonnes would be needed to reach 13.5% STU.
- These extra imports would be a mix of raw and refined sugar.
- Czapp’s new Interactive Data tool, the WASDE Scenario Planner, now enables you to gauge an understanding of what a change in beet production, cane production, Mexican imports and consumption numbers might have on the WASDE balance sheet and STU.
- Head to Czapp’s Video Tutorial Centre to learn more about how to use this new Interactive Data feature.
