World Sugar Situation
June 1997

Image: Situation Summary

Summary

Production

The 1996/97 world sugar production estimate has been reduced by 2.6 million tons to 122.3 million tons, slightly below the record 1995/96 output. India accounted for most of the decrease. Lower sugar cane yields and an increased diversion of cane towards production of alternative sweeteners like gur and khandsari sharply reduced Indian output.

World sugar production in 1997/98 is forecast at 122.4 million tons, about the same as the 1995/96 and 1996/97 levels. Record sugar production is expected in some countries of Central and South America such as Guatemala and Brazil. Other countries such as South Africa, Thailand, Turkey, Egypt, and Australia are also forecast to reach record production levels. Most of the expected increases in sugar production are due to favorable weather.

Trade

The 1996/97 world sugar trade estimate has been increased 1 percent to 35.8 million tons. Higher exportable supplies in the European Union and Thailand account for the increase.

The 1997/98 world sugar trade is forecast to increase by 1 percent from 1996/97 to a record 36.1 million tons. Higher exports from Australia, Guatemala, Thailand, and Turkey are expected to account for most of the higher exports. Traditional sugar exporters such as Brazil and Ukraine are forecast to keep their exports flat.

Image: Leading Sugar Consuming Countries

Leading importers of sugar are expected to be China, Russia, Japan, Malaysia, Indonesia, and the Republic of Korea. Russia is forecast to decrease its imports of sugar from this year. The majority of Russian refined sugar comes from Ukraine. In an attempt to protect its markets, the Government of Russia has proposed an increase of the import tariff on sugar. However, imports are still forecast at 3 million tons in 1997/98. China has recently been able to decrease the problem of smuggling of sugar into the country. This may lead to a long term decrease in the amounts of imported sugar. However, as Chinese sugar consumption continues to outpace its production, China will be required to import additional sugar.

Consumption

The world sugar consumption estimate for 1996/97 is unchanged at 122.9 million tons. In 1997/98, consumption is forecast to increase 2 percent to a record 125 million tons. This increase is expected to be driven by many of the chief consuming countries, especially in Central and South America, Africa, the Middle East, and Asia. The surge is due to a mix of factors, including higher consumer incomes, population growth, and rising consumer demand for sugar-containing products such as soft-drinks and processed foods.

In Asia, which accounts for 35 percent of total world sugar use, consumption has increased dramatically. Rising sugar production in China, Pakistan, and Thailand, combined with rapid expansion of the beverage, alcohol, and confectionary industries has been a powerful force behind increasing Asian demand.

Stocks

The world sugar ending stock estimate for 1996/97 was reduced by 1.9 million tons to 24.8 million tons. India accounts for most of the reduction in world stocks due to the smaller harvest.

Situation and Outlook in Selected Countries

Image: Leading Sugar Exporting Countries

North America

Canada

Canada's sugar production in 1997/98 is forecast at 115,000 tons, a 21 percent drop from last year's output. This drop in production is due mostly to decreased acreage devoted to sugar and lower yields in Alberta, one of the major sugar beet producing provinces.

Canadian raw sugar imports are forecast to increase 4 percent in 1997/98, to 1.14 million tons. However, refined sugar imports are forecast to continue to decrease 3 percent. On November 6, 1995, Canada initiated an anti-dumping action on imports of U.S. refined sugar. This has severly restricted U.S. exports. According to official Canadian trade data, imports of U.S. refined sugar fell to 28,640 tons in MY 1995/96, down sharply from the previous 3 year average of about 113,000 tons. The sharp decline of sugar imports from the United States enabled Canadian sugar refiners to increase their imports of raw sugar to capture an increased share of the domestic consumption of refined sugar.

Mexico

Mexican sugar production in 1997/98 is expected to increase 2 percent to 4.77 million tons. Although cane area is unchanged from last year, cane yields are expected to be higher due to better weather conditions and technical improvements.

Consumption is expected to be up slightly for 1997/98. Growth in consumption will largely depend on the progress of the country's economic recovery and the volume of imported and alternative sweeteners.

On February 27, 1997, the Mexican government announced the initiation of an anti-dumping investigation on the imports of high fructose corn syrup (HFCS) from the U.S. The decision followed months of speculation following the Mexican sugar industry's petition in the fall of 1996. The Mexican Chamber for the Sugar and Alcohol Industries alleges the price level at which U.S. HFCS is imported prevents domestic sugar prices from reaching maximum potential levels.

Mexico sugar exports in 1996/97 are estimated at 550,000 tons, 83 percent above the previous estimate. This jump is mainly due to an increase in Mexican exports under the Temporary Export Program (TEP). In 1997/98 exports are forecast to approximate the 1996/97 volume. Sugar exports under the U.S. quota for MY1996/97 will be about 25,000 tons. The Mexican sugar market continues to be protected through a system of variable tariff levels on imported sugar.

United States' sugar production in fiscal year 1997/98 is forecast at 6.8 million tons, an increase of 4 percent from last year's production. This increase in production is due mainly to an increase in forecast sugarbeet harvested area.

The 1996/97 U.S. sugar production estimate is 6.5 million tons. Cane sugar production continues to fall in Hawaii and Puerto Rico, while that of Louisiana improved slightly. Beet sugar production estmate remains unchanged.

U.S. exports in 1997/98 are forecast at 272,000 tons, up 17 percent over last year's shipments. The U.S. export markets are largely Canada, Mexico, and Jamaica.

U.S. imports to date (October 1996-March 1997) are 1.3 million tons. For fiscal year 1996/97, the U.S. has allocated 2.1 million tons of sugar imports under the raw sugar tariff rate quota (TRQ). This is a 200,000 metric ton increase from the 1995/96 fiscal year allocation. According to its commitment with the World Trade Organisation (WTO), the U.S. must allow at least 1.14 million tons of sugar per year at the lowtariff level of the TRQ for raw sugar, or refined sugar in the case of Mexico. The TRQ for fiscal 1997/98 has not yet been announced.

U.S. Raw Sugar Tariff Rate Quota
1996/97 Allocations
(Metric tons, Raw Value)

Caribbean/Central/South America

Colombia

Colombian sugar output is forecast at 2.05 million tons, unchanged from the revised 1996/97 estimate.

Colombia's domestic sugar consumption increased 3 percent in 1996/97. The increase resulted from low retail price increases. The domestic consumption rate of sugar is expected to slow in 1997/98 to an increase of only 1 percent as domestic sugar prices are expected to grow faster than the inflation rate.

Colombia exports about one-third of its sugar output. In 1997/98, Colombia's exports are forecast to decrease slightly to 584,000 tons. Colombian exporters receive an export subsidy. However, sugar exported to the United States does not receive a subsidy since U.S. sugar prices are well above the world market price. Colombia is forecast to import 40,000 tons of sugar in 1997/98. These imports will come from countries within the Andean Pact. Through a variable import duty system, the Government of Colombia discourages imports from countries outside the Andean Pact.

Venezuela

Venezuelan sugar output for 1997/98 is forecast to increase 2 percent to 570,000 tons. Venezuelan production accounts for 60-70 percent of domestic consumption. The shortfall is imported from Colombia and Central America.

Despite projected increases in production, Venezuela will remain a sugar deficit country and imports will be required to meet domestic demand. Imports for 1997/98 are forecast to increase 29 percent to 308,000 tons.

Venezuela has a small specialty sugar export quota under the United States' tariff rate quota, but it has never utilized this quota. It does, however, export raw and refined sugar to Colombia. Exports in 1997/98 are forecast to drop slightly to 50,000 tons.

Dominican Republic

Revised figures for the 1996/97 harvest indicate a 10 percent increase from the 1995/96 output. Production in 1997/98 is forecast to decrease 4 percent to 630,000 tons due to dry weather conditions.

Exports have been revised up to 357,000 tons for 1996/97 assuming an additional U.S. quota allocation of 35,000 tons in May. The quota was already increased once in March from 285,558 tons to 321,324 tons. Additional non-quota exports are not expected. Exports are forecast to decrease to 322,000 tons in 1997/98, a 10 percent drop.

The increase in the original 1996/97 U.S. quota allocation, which occurred in March 1997, for the Dominican Republic has not put additional pressure on domestic sugar availability. Sugar imports at the end of CY 1996 avoided a shortage in refined sugar. A growing tourism sector is expected to keep demand for sugar and sugar-based products strong, especially for soft drinks, juices, preserves, and confectionary items.

Honduras

Honduran sugar production in 1997/98 is forecast at 269,000 tons, up slightly from last year's output. This increase is due to higher sugar cane yields and a small increase in the area harvested.

A surge in output during the 1996/97 harvest allowed the Honduran sugar industry to export 56,000 tons, an increase of 29 percent from original estimates. For the past several years, Honduras has only exported enough to fill its U.S. quota. However, with the increase in exports, approximately 35 percent of Honduras' sugar will go toward filling the U.S. quota, the remainder will be exported to the world market. Exports for 1997/98 are forecast at 55,000 tons.

Guatemala

The sugar industry in Guatemala continues to expand. Five sugar mills are increasing their milling capacity. Industry sources state that they hope to increase milling capacity by 50 percent in the next three to five years. Sugar production in Guatemala is forecast to increase 5 percent in 1997/98 to 1.5 million tons. Area planted increased 5 percent from last year and is expected to continue to rise. This increase is due to relatively larger profits for sugar cane production compared to soybeans and livestock.

Given the increase in production, Guatemalan exports have also slowly increased over the past few years. Exports for 1996/97 are expected to break the one million-ton mark, reaching 1.02 million tons. In 1997/98, exports are forecast slightly higher at 1.05 million tons. As of April 1, 1997, Guatemala has exported 556,188 tons of sugar.

Although Guatemala has not imported sugar for the past few years, the Ministry of Economy plans to announce a tariff rate quota for sugar in 1997. ASAZGUA, the Guatemalan Association of Sugar Producers has agreed to a quota of 10,000 tons at a tariff rate of 15 percent. The out-of-quota rate will be set at 55 percent.

Cuba

According to press reports, sources with direct access to the Sugar Ministry data indicate Cuba produced 4.2 million tons of sugar by mid-May. With only a few mills still grinding, these same sources project final 1996/97 production at 4.25 million tons. The USDA maintains its 1996/97 Cuban crop estimate at 4.4 million tons and will continue to monitor the situation.

Brazil

Brazil's sugar production in 1997/98 is forecast at a record 14.8 million tons, 2 percent above the 1996/97 output. The record crop is due to favorable weather conditions. In addition, sugarcane plantations are fully recovered from the damage caused by the 1994 frost, which was followed by a drought.

Brazil's sugar exports in 1997/98 are forecast to remain unchanged from last year's revised export estimate of 5.8 million tons. Although Brazilian exports have remained unchanged for the past few years, some industry sources believe that sugar exports will stabilize at seven to eight millions tons, raw value, over the next decade, presuming the maintenance of some form of the current alcohol program. In 1996/97, Brazil shipped almost 4 millions tons of refined and semi-refined ("cristal") sugar. The largest markets were Russia, the United States, Egypt, and Algeria. Raw sugar exports totaled 1.2 million tons.

European Union

The European Union is unique in that many of its Member States are not only exporters of white sugar but also major importers of raw and white sugar.

EU sugar production for 1997/98 is forecast at 17.6 millions tons, down 4 percent from the previous year. This forecast reflects the dry weather conditions in Northern Europe and assumes that there will not be a repeat of the favorable autumn rains that boosted production in the 1996/97 season. The EU's sugar production policy is closely tied to its political commitment to aid the economies of its former colonies and territories, its current overseas territories and India along with its desire to maintain beet production and sugar refining capacity within its borders.

In 1997/98, the European Union is forecast to export 5.2 millions tons, down 10 percent from last year's level. Imports in 1997/98 are forecast unchanged at 1.6 million tons. The EU's sugar support system operates on two principal mechanisms: protection from third country imports and the use of export subsidies to dispose of surplus Community production in the world market. The current EU regulation provides for the reduction of production quotas, an increase in producer levies and other measures if necessary to ensure compliance with Uruguay Round commitments. Uruguay Round commitments regarding import charges and disciplines on the volume and budgetary outlay for export subsidies could eventually force down EU sugar production. Currently, there is no impetus in the EU to liberalize trade in sugar beyond the commitments made in the Uruguay Round Agreement.

Eastern Europe/Former Soviet Union

Poland

In 1996/97, Poland reached a record sugar production level of 2.5 million tons. This significantly exceeded the Polish government's marketing quota for the domestic and export markets. For 1997/98, production is forecast to decrease to 1.9 million tons, a 24 percent decrease from the previous year. In 1996/97, domestic sugar sales were limited by the government sugar policy. Faced with large ending stocks from 1996/97, processors are offering contract prices to farmers for the new crop that are relatively unattractive compared to grain and rapeseed price prospects.

Although sugar production is forecast to drop, Poland is still forecast to export 150,000 tons. In addition to sugar, Poland also exports significant amounts of molasses. Polish molasses has a high sugar content and brings a premium on the world market. Most of the molasses is shipped to the EU and the United States.

Due to high domestic sugar prices in 1996/97, Poland imported 13,000 tons of sugar from the Czech Republic under preferential import tariffs, and another 22,000 tons from other sources, mainly the European Union.

Poland's smaller production in 1997/98 is forecast to exceed domestic consumption. Despite the Polish government's marketing quotas for sugar, which effectively raise consumer prices by limiting the amount of sugar available in the domestic market, industrial demand for sugar has increased more than household direct consumption has declined.

Czech Republic

Sugar production for 1996/97 has been revised up 9 percent to 610,000 tons. This is the highest level of production in more than 70 years. The forecast for the 1997/98 output is for a 23 percent decrease to 470,000 tons.

Given the high production level, exports in 1996/97 rose almost 50 percent to 135,000 tons. Exports are forecast to drop to 30,000 in 1997/98 due to the expected smaller harvest. In addition, exports will likely be hampered by increased competition from other exporters. Most of the exported sugar will likely be sold at prices below the cost of production, placing more financial pressure on producers and refiners. Slovakia purchased close to 90 percent of all Czech sugar exports.

Sugar imports are forecast to increase 25 percent to 20,000 tons in 1997/98. The Czech Republic maintains relatively high import tariffs on sugar and sugar related products. However, the Czech Republic's membership in the Central European Free Trade Agreement (CEFTA) reduces tariffs and promotes freer trade with other members (Poland, Slovakia, Slovenia, and Hungary).

Policy changes in the sugar sector in the next five years will mainly relate to harmonization with European Union policies in preparation for the Czech Republic's planned European Union accession.

Bulgaria

In 1997/98, Bulgaria's sugar production is forecast to remain unchanged from last year's reduced estimate of 9,000 tons. The drop in production since 1995/96 is due the lack of government support for producers, such as minimum price support prices, and the inability of sugar plants to offer attractive wholesale prices. Currently, the government of Bulgaria's agricultural policy favors wheat, corn, and tobacco products, leaving limited financing for sugar beet farmers. Therefore, local production is only 5-10 percent of local consumption.

Imports in 1997/98 are forecast to decrease by 4 percent, to 274,000 tons. Raw sugar, from cane, continues to hold the largest share of sugar imports because of the low tariff duty and the great demand from processors. Major exporters of refined sugar to Bulgaria are Germany, Ukraine, and Sudan.

Exports of both refined and raw sugar soared in 1996/97 due to the devaluation of the local currency and low local demand. Refined sugar exports increased 350 percent and raw sugar increased 8 percent compared to 1995/96. Bulgarian exports are forecast to increase 5 percent to 170,000 tons in 1997/98.

With a new government, a change in policy is expected for Bulgaria, including the liberalization of prices of agricultural products and closure of the least sufficient state-owned enterprises. This may lead to the shutting down of some sugar plants in spite of the negative social effect. However, one sugar plant has already been privatized. Finalization of other privatization deals are expected to be completed by the end of 1997 or early 1998.

Russia

Russian sugar production for 1996/97 is reduced 15 percent to 1.75 million tons. Production for 1997/98 is forecast at 1.8 million tons.

In 1996/97, Russian imports of sugar increased 3 percent to 3.3 million tons. This increase in imports, combined with the decline of Russian production and the sharp drop in the price of sugar have brought demands for import quotas. In the last marketing year Russia imported 3.3 million tons of raw and white sugar. Russian sugar producers, to protect themselves asked the government to establish customs duties on imported sugar. Instead, the Government came up with a long-term program for the industry. The program sets out projected support levels through 2005. The program envisages future investment in the sugar industry, in part by the government budget, foreign investment, and other off-budget sources.

During the first nine months of 1996, only 4.9 percent of expected customs taxes were collected on imports of sugar. Custom taxes and VAT were not collected on 90 percent of the sugar imported from Ukraine. At the beginning of 1997, up to 3 million tons of sugar were stored in Ukrainian warehouses due to beneficial terms under which Ukrainian importers buy foreign raw sugar. Huge Ukrainian sugar stocks pose potential problems for Russian producers in the future.

In further attempts to protect the Russian sugar market, industry officials state that they are looking at including instituting or raising tariffs on sugar from Ukraine. The proposed tariff rate quota for Ukraine allows the duty-free import of 750,000 tons in 1997, down from the 1.1 million tons that was originally allowed. Imports above that figure would be subject to tariffs imposed on sugar from outside the CIS, 25 percent. It remains to be seen if all of these tariffs will be collected, and if they will reduce shipments from Ukraine.

Ukraine

Ukraine's sugar industry has been on the decline over the past few years. Production is forecast to drop for the third consecutive year. Sugar output for 1997/98 is forecast at 2.85 million tons, down slighlty from last year's production. The decline in production is due to a severe shortage of resources including inputs and credit to finance new technology for the sugar beet farms.

As a result of reduced beet sugar supply, sugar factories are facing shortages of raw material for processing. In addition, these factories lack funds to finance other inputs to continue their operations. In addition, the Ukrainian government has limited the profit margins for the sugar industry which makes it very difficult during years of high inflation.

Ukrainian sugar exports are forecast to remain unchanged from last year at 1.1 million tons. Russia is the main importer of Ukrainian sugar. However, the Government of Russia has indicated intentions to impose an import quota on Ukrainian sugar below the current levels.

Imports in 1997/98 are forecast to decrease 60 percent to 200,000 tons. The majority of Ukrainian imports are from Cuba, Brazil, and Guatemala. Sugar is imported as raw sugar, refined in Ukraine, and trans-shipped to Russia. With a possible Russian import tariff increase, Ukrainian imports may drop.

Domestic consumption has also declined over the last few years. Part of the reason is the general economic situation in the country. However, in spite of a decline in sugar production in Ukraine, domestic consumption is expected to stabilize due to an increase in the consumption of soft drinks and other confectionary products produced using foreign capital.

Africa

South Africa

After a good rainfall season in 1995/96, the sugar industry returned to produce at more normal levels. Sugar production increased from 1.77 million tons in 1995/96 to 2.4 million tons in 1996/97. This boost in production also led to increases in exports, ranging from less than 400,000 tons in 1995/96 to more than 1 million tons the following year. Rainfall has also been good for the new season. Production is forecast to increase 4 percent to 2.5 million tons in 1997/98.

Given the forecast increase in production, exports are also expected to increase. In 1997/98, South African exports are forecast to increase by 4 percent, to 1.1 million tons. In 1996/97, 29 new export destinations opened up, including a range of Coca-Cola factories in East Africa, Iran, and Mauritius.

Imports in 1997/98 are forecast to rise 5 percent to 56,000 tons. South African domestic market sales are affected by the increased availability of sugar from Swaziland, which, as a member of the Southern African Customs Union, enjoys free access to the market. Exported sugar from Swaziland in 1996 has caused a rift between the two neighboring industries. The problem is not expected to be resolved before a new customs agreement is signed. It is currently being negotiated.

Egypt

Egypt's production in 1997/98 is forecast to increase 3 percent to 1.2 million tons of sugar, comprising both cane and beet. Cane sugar is an old crop, grown mainly in Upper Egypt and comprises 85 percent of total sugar production. Beet sugar, grown in the northern part of the Nile Delta, accounts for the remaining 15 percent. However, beet sugar production is expected to gradually increase up to 20 percent by the year 1999. Given that sugar crops are extremely important to Egypt's national economy, the Government of Egypt (GOE) continues to promote both cane and beet sugar production. However, given the extreme competition for Egypt's limited land and water resources, sugar cane area is not expected to increase. The new GOE sugar policy is aimed at promoting beet sugar production by establishing three new sugar beet milling facilities. One mill opened earlier this year.

Egypt is a major importer of sugar and relies on imports to meet about one third of its total sugar requirement. Although imports were increased by 6 percent in 1996, imports are forecast to decrease in 1997/98, to 560,000 tons. This drop is expected due to a larger carry-in stock and a larger production. In 1996, Egypt imported a greater amount of refined sugar since a lower world price for refined sugar made it more profitable than purchasing raw. However, this situation is expected to be reversed in 1997, as raw sugar prices are expected to drop.

The importation of sugar is essential to domestic needs. Imports of beet or cane sugar, raw or refined are assesed an import tariff of 10 percent.

Egyptian domestic consumption of sugar is forecast to increase to 1.68 million tons in 1997/98. Roughly one-third of the consumption needs are imported, and the remainder comes from domestic production. The GOE continues to subsidize sugar consumption under the ration system, albeit it at a decreasing rate. The GOE is currently making efforts aimed at reducing sugar consumption by reducing the amount of sugar available under the ration system. However, this is a long term plan.

Asia

Thailand

Thai sugar production in 1997/98 is forecast to increase 2 percent to a record 6.4 million tons. An increase in area planted, in response to good prices, improved yields, and higher quality are the reasons for the growth.

Sugar output is divided into three quotas: Quota A--1.7 million tons of plantation white for domestic consumption; Quota B--800,000 tons of raw sugar to cover long term export contracts; and Quota C-- (the balance) for export to the international market. Priority is given to filling Quotas A and B.

Sugar is one of Thailand's major agricultural export products. Exports are forecast to reach a record 4.8 million tons in 1997/98, a slight increase over the 1996/97 revised estimate. Thailand has increased sales to Indonesia, Malaysia, the Philippines, and Iran.

Sugar consumption is forecast to increase 3 percent in 1997/98. This is due in part to the expansion of food and pharmaceutical products and bakery industries.

India

India's sugar output is forecast at 13.7 million tons, down 7 percent from the revised 1996/97 output. The expected decrease in 1997/98 is due to lower cane supplies and rising cane use by producers of alternative sweeteners. In addition, payment arrears have caused farmers to shift area away from cane production and use fewer inputs.

Khandsari production is also expected to increase to 800,000 tons, up from the low of the last 2 years of 750,000 tons as cane prices offered by khandsari units are 10-12 percent higher than those offered by gur producers.

Image: Thailand's Sugar Production and Exports Continue to Grow in 1997/98

Sugar exports in 1997/98 are forecast to decrease 9 percent to 500,000 tons. Despite large sugar stocks, cane support prices and high production costs have limited exports from India. Assuming international sugar prices stay below Indian prices, exports are expected to decrease. The recent decision to liberalize sugar exports has not led to larger exports, as foreign buyers are able to source sugar at more competitive prices from other origins. Export liberalization has resulted in a loss of some of the pricing flexibility which existed under the previous monopoly export system. India produces enough sugar to meet domestic demand. No imports are forecast for 1997/98.

Over the past few years, sugar consumption has grown at a rate of 3-4 percent, about twice the rate of population growth. However, for 1997/98, the consumption growth rate is forecast to be slightly lower as forecasted lower sugar production and declining sugar stocks are expected to boost open market sugar prices.

China

China's production for 1997/98 is forecast to increase by 2 percent to 7.2 million tons. This increase is due mainly to an increase in sugarcane area and yields. Although China plans to increase its production of sugar dramatically over the long-term, only a marginal increase in production is expected in the forecast year.

China has effectively cracked down on smuggling in 1996/97, but it is still suffering the effects of rampant smuggling two years earlier. As a result, China planned to drastically reduce imports in 1996/97. Since the beginning of 1997, imports have dropped off dramatically in response to a government ban on imports. Despite the successful crack- down on smuggling in China, sugar refineries are still suffering financial difficulties resulting from low domestic prices. To alleviate the problem somewhat, the government procured 400,000 tons of refined sugar in 1997, and has issued loans to various industrial enterprises to cover the cost of storage. In addition, as growth in consumption continues to outpace production, Chinese imports of sugar will most likely rise in 1997/98.

Japan

Japan's sugar production for 1997/98 is forecast at 870,000 tons, up 12 percent from the previous year's revised estimate. In 1996/97 Japan's sugar output declined to 765,000 tons, a 12 percent decrease from the original forecast.

Apparent sugar consumption in Japan has slowly been declining over the past decade, as there has been an increase in consumption of sugar-containing products. Many Japanese beverages now contain HFCS or use other natural sweeteners derived from other substances than sugar, such as maltitol and stevia. These substitutes are considered to be more natural.

As a result of declining sugar consumption, imports in 1997/98 are forecast to decline to 1.65 million tons, a 2 percent drop from the 1996/97 level.

Oceania

The Australian sugar industry is currently in an expansionary phase. Increased acreage is being devoted to sugar cane and more new growers are entering the industry. In 1996/97 production reached a record 40 million tons, a fifth consecutive production record. Australia is forecasting another record in 1997/98, with production forecast to increase 3 percent.

Australian sugar exports are expected to increase 8 percent in 1997/98 to 4.8 million tons. Rapid growth in sugar consumption in Asia has prompted the Australian industry to focus on that region. Asia accounted for more than two-thirds of the industry's exports in 1995/96. In addition to the Asian market, Australia recently began exporting to Slovenia, Mexico, and the Philippines.

In 1989, Australia lifted the sugar import embargo, allowing for the first time, imports in commercial quantities. Industry contacts suggest that the majority of imports today are Australian sugar shipped raw, processed and then re-exported to Australia. Imports are dominated by Germany, Mauritius, and New Zealand.

The Australian sugar industry has been undergoing a period of major transformation. Regulation is being replaced by a more market oriented, deregulated system. Recently, the Australian government undertook a review of the industry, in an attempt to make it more competitive. One of the results from this review is the elimination of the sugar import tariff on July 1, 1997. The Australian industry is becoming more competitive. With refining capacity well in excess of domestic consumption, and production rising, it seems unlikely that sugar imports will become significant in the future. Imports for 1997/98 are forecast to remain unchanged from last year at 2,000 tons.

Lower sugar prices and strong promotional campaigns by the Australian sugar industry have led to an increase in domestic sugar consumption. Consumption is forecast to increase 2 percent in 1997/98.

Image: Growth of Australian Exports and Production

World and Domestic Sugar Prices

Image: Domestic Raw Sugar Prices

World prices for Image: domestraw sugar (f.o.b. Caribbean Contract No. 11) averaged 11.21 cents per pound during the first quarter of 1997, compared to 12.76 cents a pound in the first quarter of 1996. The weakening of world raw sugar prices in the last quarter of 1995 was reflected in the surplus situation in 1996. However, the sugar surplus has not put as much pressure on world raw sugar prices as expected. Much of the 1996 surplus was not available for export since it is located in countries with high domestic demand and restrictive export policies. In addition, increased sugar imports into the United States, under the TRQ have maintained relatively strong world prices . In the first quarter of 1997, world raw sugar prices dropped significantly, reaching a low of 11.06 cents per pound in February. This drop in price is due mainly to a high level of stocks and increased production.

World refined sugar (c.i.f., London, Contract No. 5) prices averaged 14.02 cents per pound during the first quarter of 1997, compared to 17.85 cents per pound in the first quarter of 1996.

In the United States, wholesale refined sugar prices averaged 28.53 cents per pound in the first quarter of 1997, compared to 29.17 cents, per pound first quarter of 1996. The strong prices in 1996 were in part due to a much poorer 1995/96 U.S. beet sugar output than had been expected earlier in the season. Prices appear to be softening in the spring of 1997, as there are prospects for a better beet crop in 1997/98, and the pace of growth of U.S. sugar deliveries may be weakening.

U.S. raw sugar prices (nearby futures, c.i.f., duty-fee paid, New York, Contract No. 14) averaged 21.89 cents per pound for the first quarter of 1997, compared to 22.58 cents per pound in the first quarter of 1996. A much larger share of the

U.S. market was supplied by cane sugar in 1996 than in previous recent years, as lower beet sugar supplies were offset with more imported raw cane sugar. The plentiful cane sugar supplies stretched some cane refiners toward capacity limits, and when refiners accept or need less raw sugar, raw sugar prices can soften.

Image: World Raw Sugar Prices

World U.S. Raw and Refined Sugar Prices
(monthly averages)

World Raw Sugar Prices 1/
(Cents per Pound)

1/ Contract No. 11 F.O.B stowed port (including Brazil bulk spot price)
Source: New York, Coffee, Sugar, and Cocoa Exchange

World Refined Sugar Prices 2/
(Cents per Pound)

2/ Contract No. 5, London Daily Price for refined sugar, F.O.B Europe, spot.
Source: London Commodities Exchange, London

U.S. Raw Sugar Prices 3/
(Cents per Pound)

3/ Duty-Free paid, New York
Source: New York, Coffee, Sugar, and Cocoa Exchange

U.S. Wholesale Refined Sugar Prices 4/
(Cents per Pound)

4/ Midwest Market
Source: Milling and Baking News

US Horticultural Exports

Sugar and Sweetners

Image: U.S. Exports of Beverages containing Nutrasweet
Image: Top Five Markets for U.S. Exports of High Fructose Corn Syrup
Image: U.S. Exports of High Fructose Corn Syrup
Image: Top Five Markets for U.S. Exports of Beverages containing Nutrasweet
Image: Top Five Markets for U.S. Exports of Confectionery Sugar Products
Image: U.S. Exports of Confectionery Sugar Products
Image: Top Five Markets for U.S. Exports of Sugar (including Molasses and syrups)
Image: U.S. Exports of Sugar (including Molasses and Syrups)
Image: U.S. Exports of Selected Sweetners Set Another Record in 1996
Image: U.S. Exports of Honey
Image: Top Five Markets for U.S. Exports of Honey

Data Tables

World Production, Supply and Demand: Centrifugal Sugar, part 1
World Production, Supply and Demand: Centrifugal Sugar, part 2
World Production, Supply and Demand: Centrifugal Sugar, part 3
World Production, Supply and Demand: Centrifugal Sugar, part 4
World Production, Supply and Demand: Centrifugal Sugar, part 5
World Production, Supply and Demand: Centrifugal Sugar, part 6
World Production, Supply and Demand: Centrifugal Sugar, part 7
World Production, Supply and Demand: Centrifugal Sugar, part 8
World Production, Supply and Demand: Centrifugal Sugar, part 9
World Production, Supply and Demand: Centrifugal Sugar, part 10
World Production, Supply and Demand: Centrifugal Sugar, part 11
World Production, Supply and Demand: Centrifugal Sugar, part 12
World Production, Supply and Demand: Centrifugal Sugar, part 13
World Production, Supply and Demand: Centrifugal Sugar, part 14
World Production, Supply and Demand: Centrifugal Sugar, part 15
World Production, Supply and Demand: Centrifugal Sugar, part 16
World Production, Supply and Demand: Centrifugal Sugar, part 17

U.S. Trade: Refined Sugar Exports by Country of Destination, part 1
U.S. Trade: Refined Sugar Exports by Country of Destination, part 2
U.S. Trade: Refined Sugar Exports by Country of Destination, part 3

U.S. Trade: Refined Sugar Imports by Country of Origin

Last modified: Tuesday, May 08, 2001