TRAVERSE CITY, MICH. — Frank Jenkins, president of JSG Commodities, Wilton, Conn., offered a bearish outlook for domestic sugar prices at the International Sweetener Symposium, sponsored by the American Sugar Alliance, on Aug. 6 in Traverse City.
Mr. Jenkins forecast domestic refined sugar prices for 2018-19 (beginning Oct. 1) to average between 31c and 33c a lb f.o.b. Midwest and raw cane sugar to average between 24.75c and 25.75c a lb.
Currently, refined beet sugar is selling at around 33c a lb f.o.b. Midwest for 2018-19, according to Milling & Baking News. Beet sugar prices for the current 2017-18 marketing year are a nominal 36c a lb as processors mostly are sold out. Beet sugar currently being delivered sold for around 32c a lb f.o.b. Midwest a year ago.
New York ICE nearby domestic raw cane sugar future settled at 26c a lb on Aug. 6 and 2018-19 months settled between 25.64c to 26.29c a lb.
Mr. Jenkins said U.S. sugar production in 2018-19 was above current U.S. Department of Agriculture forecasts and indications of declining domestic sugar consumption were bearish factors for sugar prices. He forecast 2018-19 domestic sugar production at 9.075 million tons, raw value, including beet sugar production at 5.150 million tons, compared with the U.S.D.A.’s July forecast of 8.776 million tons, including 5.036 million tons of beet sugar. Beet sugar production for 2017-18 was forecast by the U.S.D.A. at a record 5.276 million tons and total domestic sugar production at a record 9.293 million tons.
Domestic food use of sugar in 2018-19 was forecast at 12.175 million tons, up 1% from the current year’s forecast, compared to the U.S.D.A.’s projection of 12.4 million tons, up 1.35%. Mr. Jenkins forecast sugar use for food in the current year at 12.055 million tons, about flat with 2016-17, compared with the U.S.D.A.’s forecast of 12.235 million tons, up 1.1%. The U.S.D.A. in July lowered its forecasts of sugar deliveries for food use by 65,000 tons for 2017-18 and by 100,000 tons for 2018-19. He also forecast slightly higher U.S. sugar imports at 3.432 million tons, compared with the U.S.D.A.’s 3.402 million tons, and lower exports at 145,000 tons versus 170,000 tons, all for 2017-18. As a result, he forecast the 2017-18 ending stocks-to-use ratio at 18.18% compared with 16% as the latest U.S.D.A. forecast.
He said the U.S.D.A.’s monthly Sweetener Market Data report showed sugar deliveries for food down 1.3% through the first eight months of the marketing year.
He also cited numerous food companies that were reformulating products to reduce sugar content, including J.M. Smucker and Coca-Cola as just two of many companies seeking to reduce sugar.
“It’s a horrible trend for sugar,” Mr. Jenkins said.
He indicated that, through July, Mexico was on track to meet all of its export requirements under the U.S.-Mexico suspension agreements.
“Mexico has performed pretty flawlessly,” Mr. Jenkins said.
Mr. Jenkins said U.S. beet sugar sellers “did a fantastic job” of buying back market share from cane refiners when the refined cane premium moved to historic levels over beet sugar in 2016 because of concerns about G.M.O. labeling.
“It costs a lot of money if you want to stay away from a product,” Mr. Jenkins said in reference to higher prices for non-G.M.O. refined cane sugar over beet sugar, which is nearly all G.M.O.
If beet sugar sellers want to increase market share, they do it through lower prices to the detriment of refined cane sugar, which must deal with a floor price based on raw cane prices, he said.