KANSAS CITY — The US sugar market appears in a state of flux amid uncertain supply (both domestic and global) and demand expectations for the 2023-24 marketing year that began Oct. 1. Prices remain historically high.

The US Department of Agriculture in its Nov. 9 World Agricultural Supply and Demand Estimates report forecast 2023-24 US beet sugar production at a record-high 5,363,000 tons, raw value, up 3.4% from 2022-23 and eclipsing the 2017-18 record of 5,279,000 tons by 1.6%, if realized.

Near ideal harvest conditions in most states, along with a favorable growing season after a rocky start in the spring, are expected to result in the third largest sugar beet crop on record (after 2016 and 2021) at 35,508,000 tons, up 9% from 2022, and the third highest average yield at 31.7 tons per acre, tied with 2017 (after 2021 and 2016), according to data from the USDA’s National Agricultural Statistics Service.

The crop was so large in the top beet producing region of Minnesota and North Dakota that grower members of two cooperatives were asked to leave a combined total of 45,000 acres of beets (just over 8% of planted area) unharvested as final tonnage would have exceeded processing capacity.

The large beet crop and high beet sugar production will help offset drought-reduced sugar cane and cane sugar production in Louisiana and Texas and lower exportable supply in Mexico, the largest sugar supplier to the United States, also because of drought. Florida sugar cane areas were drought free.

US 2023 sugar cane production was estimated by the USDA at 32,829,000 tons, down 5% from 2022 as a 1% increase in Florida is more than offset by an 11% drop in Louisiana and a 40% tumble in Texas.

The USDA forecast 2023-24 US cane sugar production at 3,866,000 tons, down 4.8% from 2022-23 as a 2.7% increase for Florida (at 2,037,000 tons) is more than offset by an 11% decrease for Louisiana (at 1,787,000 tons) and a 45% drop for Texas (at 42,000 tons).

There remains some uncertainty about US sugar production, including Louisiana’s performance as harvest was only 35% complete as of Nov. 12, more than a week behind the average pace. While beet tonnage mostly is known with the crop in the eight reporting beet states 92% to 100% harvested as of Nov. 12, final sugar production is less certain. Sugar beets, mostly in outdoor piles, will need favorable weather (cold winter temperatures lingering into spring) to avoid spoilage as the processing season will extend further into spring than average.

Less certain is the sugar cane crop in Mexico. Cane sugar production in Mexico was estimated at 5.224 million tonnes, actual weight, in 2022-23, the lowest since 2011-12, due to drought. It was expected that the Mexican crop would rebound in 2023-24, with the initial USDA sugar production forecast at 5.8 million tonnes, but that forecast was reduced to 5.575 million tonnes in October and was reduced further to 5.33 million tonnes in November. Some in the trade believe Mexico’s sugar production may be 5 million tonnes or lower.

That’s significant for the United States because between 8% and 10% of total US sugar supply (between 35% and 40% of total US sugar imports) comes from Mexico. Sugar prices have been record high in Mexico and well above prices in the United States, which is a detriment to exporters. Last year Mexico reverted to high-duty sugar imports to “backfill” supply shipped to the United States, and the same is expected to happen again this year. Whether that is permitted under the suspension agreements that set the amount of sugar Mexico can export to the United States remains unclear.

Yet another uncertainty in the United States is sugar demand, which typically is the most difficult to forecast.

The USDA in its Nov. 9 Sweetener Market Data report said 2022-23 total sugar deliveries were 12,809,109 tons, including 12,473,374 tons for food use, which basically was flat (up just 3,220 tons from 2022-23), although total deliveries were up 121,484 tons, or 1%, due to higher exports (up 185%) and miscellaneous adjustments (up 70%). The increase in food use fell short of the typical amount attributed to population growth of about 0.5%, which suggests lower per capita sugar consumption.

The USDA forecast 2023-24 sugar deliveries for food use at 12,525,000 tons, up 52,000 tons, or 0.4%, from 2022-23. Trade sources indicated slow deliveries of bulk sugar to food manufacturers during the summer and more average shipments in the fall, while deliveries for retail sale have been as expected or even stronger. To reach the USDA forecast for 2023-24, shipments will need to be at least maintained near the level of population growth.

Refined sugar prices for 2023-24 are down from record levels in the prior two years but remain historically strong, largely due to the supply uncertainty.