In mid-March domestic sugar prices were rising in Mexico amid concerns about tight supplies after a prolonged drought in 2011. Prices there were approaching levels some suggested may attract U.S. sugar shipments into Mexico, opposite the normal flow. At the same time, the U.S. 2011-12 ending stocks-to-use ratio was an unsustainable 6.8%, the lowest in years. And nearby world raw sugar futures were near their 2012 highs.

What a difference a couple of months can make in the sugar market.

Mexico reversed from a sugar deficit to a possible 1-million-tonne surplus. The U.S. stocks-to-use ratio surged to 14.2% and near the U.S. Department of Agriculture’s “target” level. And nearby world raw sugar futures (New York) have dropped about 20%, hovering near 21-month lows.

So what changed to make the United States, Mexico and the rest of the world “suddenly” awash in sugar?
After deficit (consumption higher than production) global sugar supplies just a few years back, a number of factors, both domestic and foreign, have combined to prompt analysts to forecast a sizeable global surplus in 2011-12, although some see that surplus quickly dissolving next year as lower prices encourage demand.

While the U.S. and Mexican sugar markets may no longer be viewed separately since sugar may flow freely between the two nations under the North American Free Trade Agreement, at least their data may be viewed independently, with the exception, of course, of U.S. imports/Mexican exports. Mexican supply has made up from 25% to 45% of total U.S. sugar imports the past few years.

For the United States, the projected surge in supply came from three sources: domestic sugar beets, Tariff-Rate Quota imports and Mexico.

From its April 10 WASDE to its May 10 WASDE, U.S.D.A. projected U.S. sugar supply for 2011-12 surged 978,000 tons, raw value, or 8%. One chunk, 130,000 tons, or 13%, of the total increase, was U.S. beet sugar, most of which was forecast to come from an early-harvested 2012 crop. Sugar from the current year’s beet crop typically is counted toward next year’s supply, but any new crop sugar available before the end of the marketing year (Sept. 30) is applied to the current year.

The next largest portion, about 27% of the total, was from a projected 262,000-ton, or 36%, increase in shipments from Mexico, which just a month earlier was seen as having its own sugar deficit.

The final and largest piece of the increase, about 55%, was the result of a 536,000-ton increase in the T.R.Q., most of which the U.S.D.A. announced after the April WASDE, and most of which will come from Brazil, the Philippines and Australia, per allocation from the Office of the U.S. Trade Representative.

After subtracting a forecast 105,000-ton increase in total use, projected 2011-12 U.S. sugar ending stocks jumped 873,000 tons, or 110%, from April. Considering much of that projected increase would have to come in the last five months of 2011-12 (May through September), it’s no wonder U.S. sugar supply went from tight to ample, with a corresponding weaker tone to prices, especially what buyers are now willing to pay, which in some cases is about 10% less than a month ago.

Of course U.S. weather, Mexico and the rest of the world must cooperate to make that increase real. The latter two, by all indications, appear willing to do so, while the weather, obviously, is beyond any country’s control.

From Mexico’s side, “simple” word from the government on May 4 that it would issue a 250,000-tonne import quota was the stimulus needed to turn rising prices there into sinking prices. That quota has not yet been assigned, and probably will not be, despite 2011-12 Mexican sugar production falling shy of expectations and about 6% below 2010-11 for the crop year to date. Instead, the tight sugar supply in Mexico, which may have political consequences if prices get too high, suddenly turned ample, in part due to the “threat” of more imports and in part due to strong exports of U.S. high-fructose corn syrup to Mexico, which offset more sugar consumption than earlier forecast.

But so far, traders and statistics have indicated slow shipments of Mexican sugar to the United States. Shipments during the first seven months (October through April) of 2011-12 averaged 87,106 tons per month, down 40% from the record pace in 2010-11. To reach the U.S.D.A. projected total of 992,000 tons for the year, shipments would have to average 76,452 tons per month through September, which would appear doable.

Finally, the most sure “bet” of the three appears to be ample global sugar supply. Although running behind the year-ago pace, new crop cane harvest is under way in top producing and exporting Brazil. Thailand, the world’s second largest exporter, just completed its crush and said it would have a record large amount of sugar available for export. India, the second largest sugar producer and largest consumer, has opened its exports and may make another million or more tonnes available on the world market.

Global raw sugar prices, as reflected in nearby New York world raw sugar futures, have been trading at 21-month lows the past week, an indication of the ample supply. While that may not encourage sellers, it certainly should prompt more buying interest.

To provide more insight and greater detail about the domestic, Mexican and global sugar and sweetener markets, the Sosland Sweetener Report from Sosland Publishing debuts June 6. To learn more about this premium service, view a sample or for a free trial, go to