World Agricultural and Demand Estimates July 12, 2022

World Agricultural Supply and Demand Estimates (WASDE) July 12, 2022
The World Agricultural Outlook Board (WAOB) serves as USDA’s focal point for economic intelligence and the commodity outlook for U.S. and world agriculture. The Board coordinates, reviews, and approves the monthly World Agricultural Supply and Demand Estimates (WASDE) report, houses OCE’s Joint Agricultural Weather Facility, and coordinates USDA’s Agricultural Outlook Forum.

SUGAR: Estimated U.S. ending sugar stocks for 2021/22 are increased 64,410 short tons, raw value (STRV) to 1,781,774, as an increase in supply is only partially offset by an increase in use. USDA estimates imports to increase by 217,197 STRV. On July 1, the Department of Commerce increased the 2021/22 Mexico export limit by 135,000 STRV. This is counted as “Additional U.S. Needs Sugar” that has a polarity of less than 99.5 degrees, meaning that it is considered as raw sugar. All of this sugar is projected to enter in 2021/22. Last week USDA increased the 2021/22 raw sugar TRQ by 99,999 STRV and also extended the period for this sugar to enter the United States until the end of October. Although USTR has not yet allocated the TRQ to supplying countries, USDA projects that 38,270 STRV will enter in September for 2021/22 and 55,115 will enter in October for 2022/23 with the remainder adding to the raw sugar TRQ shortfall. USDA increased its estimate of high-tier tariff imports by 43,927 STRV to 278,436 on additional high- duty raw sugar entering in June and on an increase in the expected pace of high-duty refined sugar entering for the remainder of the year. Other than imports, supply is slightly decreased by a reduction in Florida cane sugar production only partially offset by a small increase in beet sugar production as reported by processors.

A partial offset to the supply increase comes from a 150,000 STRV increase in deliveries for human consumption to 12,600,000. The delivery pace for the first 8 months of the fiscal year is up 3.9 percent compared with the same period average for the 5 preceding years. The strong pace of deliveries is expected to continue into 2022/23 for a period of time and is presently projected to add 75,000 STRV to bring the total up to 12,525,000.

Projected beet sugar production in 2022/23 is increased by 124,335 STRV to 4,933,728 based on the 3.1 percent increase in NASS estimated planted area in the June 30 Acreage report over that indicated in Prospective Plantings at the end of March. Most notably, area planted in the Upper Midwest is estimated 7.4 percent higher than in Prospective Plantings as additional area was planted to compensate for expected low yields due to delays in planting in May. Sugarbeet harvested area is projected at 1,146,100 acres, up 3.5 percent over last year. Yield and recovery parameters, as well as August-September production (500,000 STRV), are unchanged from last month.

Imports for 2022/23 are projected at 3,501,025 STRV, an increase of 487,829 over last month. As indicated above, some of the increase is due to additional raw sugar entering in October from the increase in the 2021/22 raw sugar TRQ. Sugar entering under the 2022/23 TRQs is still projected at the minimum levels with the WTO and FTA bindings and with a raw sugar TRQ shortfall projected at 99,208 STRV. To date there has been no announcement regarding additional specialty TRQ sugar. Given these aforementioned 2022/23 projections and under the terms of the AD/CVD Suspension Agreements, sugar imported from Mexico would be expected to be projected at a level resulting in an ending U.S. stocks-to-use ratio of 13.5 percent assuming sufficient Mexican sugar for export after meeting domestic requirements in Mexico. Because USDA is not making any changes to Mexico supply and use projections for 2022/23 at this time, the implied maximum sugar available for export to the U.S. is projected at 1,756,180 STRV. This

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is less than the 1,900,775 STRV needed to a result in ending stocks of 1,709,775 for a 13.5 percent stocks-to-use ratio.

DW Montgomery & Company has provided extensive market and contractual expertise within the sugar industry for over 70 years. Our family has now three generations working within the business and has grown to include a large variety of organic and natural ingredients. It is our pleasure to serve you and assist you in your purchasing needs.

All the best,

David Montgomery, Jr., Paul Montgomery, Andrew Montgomery, and David Montgomery III