WASHINGTON — The U.S. sugar market situation addressed in this column two weeks ago has deteriorated even more with prices soaring to seven-year highs amid limited offers. Based on the U.S. Department of Agriculture’s Nov. 8 Crop Production report, the sugar beet crop in the largest U.S. sugar-producing region could be termed a disaster. And subsequent reductions to U.S. beet and cane sugar production for 2019-20 as reflected in the U.S.D.A.’s World Agricultural Supply and Demand Estimates report indicated tight domestic sugar supply going forward.

The U.S.D.A. reduced its forecast of 2019 sugar beet production by 12% from October and by 11% from 2018. The total 11-state cut pales to losses in the Red River Valley states of Minnesota, which was down 22% from October and 5% from 2018, and North Dakota, which was down 29% from October and 27% from last year. Changes in other states were minor, although additional cuts may be made in some states.

The sugar beet harvest as of Nov. 3 was the slowest on record since 2000, the U.S.D.A. said in its Nov. 15 Sugar and Sweeteners Outlook. The aggregate for the four largest producing states jumped to 96% as of Nov. 10 from 70% a week earlier, but that was only because harvest was called off early in No. 1 producing Minnesota and No. 3 North Dakota. Harvest in those states was slowed by rain and snow and then halted due to freezing soil, leaving an estimated 145,000 acres of beets unharvested. Total estimated U.S. beet harvested area of 971,000 acres is the lowest since 1960-61, the U.S.D.A. said.

The severity of the sugar beet crop situation was clearly brought to light when two major beet processors declared force majeure early in the week of Nov. 11. United Sugars Corporation, which markets sugar from the Red River Valley, said it would be unable to deliver 18% of the sugar it had sold for 2019-20. The Western Sugar Cooperative, which markets sugar from Colorado, Nebraska, Wyoming and Montana, said it would be unable to deliver 15% of its sales.

Also on Nov. 8, the U.S.D.A. lowered from October its 2019-20 U.S. sugar cane and cane sugar production forecasts. Sugar cane was reduced 2.2% due mainly to a 4.5% drop for Louisiana, where dryness and recent cold weather took its toll. Louisiana sugar cane was 54% harvested as of Nov. 17, but the remaining crop was rated only 47% good to excellent, the lowest in at least four years and something to watch going forward.

Forecast U.S. cane sugar production was reduced 2.5% from October (with Louisiana down 5.6%) and 1.5% from last year. Coupled with a 9% cut from October (7% from last year) in forecast 2019-20 beet sugar outturn, total U.S. sugar production was slashed by 572,000 tons, or 6%, from October and by 382,000 tons, or 4.3%, from 2018-19.

Adding to concerns was lower cane sugar production forecast for Mexico, which provides about 35% of U.S. imports and 8% of total U.S. sugar supply. Based on estimates from Mexico, the U.S.D.A. lowered its sugar production forecast by 4.8% from October and by 10% from 2018-19 due to drought.

Only one major U.S. cane sugar refiner was offering bulk sugar last week, with beet processors out of the market and other cane refiners assessing market conditions to ensure supply to their regular customers before offering more widely. The offering price for bulk refined cane sugar jumped to 44c a lb f.o.b., up 19% from the end of October and the highest in seven years. Some buyers indicated they could only find sugar nearer 48c a lb f.o.b.

The U.S.D.A. on Nov. 15 said it “will be addressing options in the near future in order to stabilize U.S. sugar supplies.” The department said it would make an announcement between Nov. 18 and Dec. 10 “as to quantity, type and source of additional sugar needed to ensure an adequate supply for the domestic market.”

While the domestic sugar supply situation currently appears dire, the U.S. sugar program does provide avenues for the U.S.D.A. to increase supply, though those ways are limited. The U.S.D.A. will at a minimum adjust Mexico’s export limit in the Dec. 10 WASDE. Any additional actions remain uncertain, knowing the U.S.D.A. maintains a cautious approach to import increases so as not to risk an oversupply of sugar on the U.S. market. On the flip side, this year’s supply tightness is occurring much earlier than in past years.

The good news is more than 90% of beet sugar was contracted for 2019-20 at 35c a lb f.o.b. or below and a majority of cane sugar at 36c to 37c a lb f.o.b. prior to the supply decline. The bad news is that not all of the contracted beet sugar will be delivered, and replacement or new sales will be expensive going forward.