News

U.S. deliveries for human consumption for 2016/17 are increased by 100,000 short tons, raw value (STRV) to 12.300 million based on pace-to-date through the end of May. Florida sugar production for 2016/17 is increased by 3,795 STRV to 2.055 million based on end-ofseason processor reporting to the USDA. Ending stocks are decreased by the sum of these adjustments to 1.440 million STRV, implying a stocks-to-use ratio of 11.4 percent. Imports for 2017/18 are increased by 225,445 STRV to 3.557 million. The increase is comprised of 176,370 STRV of additional specialty sugar that enters under the 2017/18 refined sugar tariffrate quota and an additional 49,075 STRV from Mexico. Deliveries for human consumption are projected to increase one-percent over the estimate for 2016/17 to 12.423 million STRV. Ending stocks for 2017/18 are projected at 1.132 million STRV, implying a stocks-to-use ratio of 9.0 percent. Mexico 2016/17 sugar imports intended for the IMMEX product re-export program are increased by 10,000 metric tons (MT) to 60,000 based on the pace to date. Sugar exports for 2016/17 to non-U.S. destinations are increased by 15,000 MT to 165,000 based on the pace to date. Exports to non-U.S. destinations for 2017/18 are decreased 15,000 MT to 10,000 based on expected higher-valued export alternatives to the U.S. market. Deliveries for the IMMEX program for 2017/18 are reduced 60,000 MT to 330,000. For 2017/18, exports to the United States are projected at 1.561 million MT. These exports are projected as the lower of the following: (1) anticipated U.S. Needs of 2.048 million MT as defined in the Suspension Agreements; or (2) the export level that yields an ending stocks-to-consumption ratio of 18.0 percent. The 18-percent stocks-to-consumption ratio is an assumed lower bound necessary for use until the new Mexico sugarcane harvest is well underway.

The Indian Sugar Mills Association has pegged the country sugar output in 2017-18 (Oct-Sep) at 25.1 million tonne, up 23.6% from 20.3 million tonne produced in the previous year. Uttar Pradesh, Maharashtra and Karnataka the three top sugar producing states are expected to produce over 19.8 million tonne of total sugar output during next season.

Prices of sugar fell in the key spot markets as mills lowered their prices to stir demand, owing to fading purchases at higher prices. Stockists have also replenished their stocks in the beginning of the month. Likely higher output in 2017-18 sugar season (Oct-Sep), backed by good monsoon rains has also weighed on the sentiments of sugar. In Delhi, sugar was down 10 rupees from previous close, while in Mumbai, the commodity was sold down 5 rupees. India sugar production is likely to rise 16-20% to around 23.5-24.5 million tonne in 2017-18 (Oct-Sep).

The October contract was up 0.3%. In the last week of June, prices of raw sugar on the Intercontinental Exchange had slipped to a 16-month low of 12.53 cents per pound. Raw sugar futures on ICE fell over 1% due to the hike in import duty.

The cooperation and marketing department of Maharashtra approved subsidy payments for cooperative mills that exported raw sugar in 2014-15 season. The payment of subsidies has been approved to enable mills to clear fair and remunerative prices to sugarcane farmers. The state had provided 100 million rupees for payment of sugar subsidies in the current financial year budget, of which 70%, or 70 million rupees, can be used for export subsidies. The government had declared a subsidy of 1,000 rupees per tonne to encourage export of raw sugar in 2014-15, when the country faced severe supply glut and record low prices of the sweetener.

Prices of sugar were down in the key wholesale markets of Mumbai as demand faded at higher prices. In Delhi, prices were unchanged after rising by 5 rupees per 100 kg on previous close, after the import duty hike, while in Mumbai, the commodity was down 5 rupees.

Futures contracts of raw sugar on the ICE fell over 1% as the import duty on sugar in India was increased to 50% from 40%. The most-active October contract was at 13.37 cents per pound, down 1.4% from the previous close.