SUGAR AND SWEETENERS--SUMMARY                                 December 19, 1995
             Approved by the World Agricultural Outlook Board
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This SUMMARY is published by the Economic Research Service, U.S. Department of
Agriculture, Washington, DC 20005-4788.  The complete text of SUGAR AND
SWEETENERS is available 2-3 working days following release of this summary.
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World Sugar Production Outpaces Consumption;
U.S. Sugar Production Lower
 
World sugar production and consumption for 1995/96 are forecast at record levels
of 117.9 and 116.6 million metric tons, respectively.  The implied surplus of
1.3 million tons for 1995/96, together with a somewhat smaller surplus estimated
for 1994/95, allows a modest rebuilding of global stocks and puts downward
pressure on world prices.  The surplus in 1994/95 followed 2 years of sugar
deficits.
 
Since the September Sugar and Sweetener Situation and Outlook report, world
sugar production and consumption were revised downward by 380,000 and 450,000
tons, respectively.  The modest downward adjustment in global production
reflects reduced production prospects for the United States, India, Pakistan,
and the Philippines that more than offset the improved outlook in Brazil,
France, China, and Thailand.  Also, downward revisions in key consuming
countries such as Brazil, Russia, and Indonesia, more than offset increased
consumption prospects by other leading sugar users, mainly Mexico and Thailand.
 
With world stocks and the stocks-to-consumption ratio expected to rise, world
prices could face  downward pressure.  The spot price in late 1995 is more than
2 cents a pound below a year ago.  Prices averaged 11.94 cents a pound (Contract
No. 11, spot basis) in October, 11.96 cents in November, and 12.39 cents for the
first 11 market days of December (through December 15).
 
Brazil's sugar production for 1995/96 is estimated at a record 13.0 million
tons, up 5 percent from last season because more cane is being used for sugar
and less for fuel alcohol.  The increase in sugar production, driven by the
demand for exports, occurred in the Center-South region.  Sugar production in
the Northeast is forecast unchanged from last season.  Many processing
facilities that had produced only alcohol have been converted to regular sugar
mills with annexed distilleries for fuel alcohol production.  
 
Brazil now has 370 processing facilities to produce sugar and/or fuel alcohol
from sugarcane.  About 25 produce only sugar, about 145 produce only fuel
alcohol, and 200 produce both sugar and alcohol.  Brazil's sugar consumption is
forecast at 8.1 million tons, the highest in Latin America and the fifth highest
in the world behind only India, the European Union (EU), the United States and
China.  Brazil's raw and refined sugar exports are forecast at a record 4.8
million tons, the world's largest.
 
U.S. sugar production for fiscal 1995/96 (October-September) is forecast at 7.49
million short tons, raw value, down 5.5 percent from the record outturn achieved
in 1994/95.  U.S. sugarbeet production is expected to total 28.9 million tons, a
decrease of 10 percent from 1994.  Area for harvest, at 1.42 million acres, is
1.2 percent below last year.  The average yield, forecast at 20.3 tons per acre,
is 1.9 tons below last year.  A cool, wet spring got the 1995 sugarbeet crop off
to a poor start and lowered expectations.  Yield-reducing disease problems in
Michigan and late season harvest problems in parts of the Great Plains and in
southern Minnesota, have caused USDA to reduce the beet sugar forecast from the
September estimate by 300,000 tons to 4.1 million tons, raw value, 393,000 tons
less than the record 1994/95 crop.
 
The decline in the beet sugar forecast is partially offset by an increase in the
forecast for cane sugar  production to 3.39 million tons, up 140,000 tons from
earlier forecasts due to the improved outlook for sugarcane yields in Louisiana
and Texas.  Despite these upward revisions, the overall outlook for cane sugar
is expected to be down slightly from 1994/95, reflecting a further contraction
in the Hawaiian sugar industry.
 
The U.S. sugar consumption forecast remains unchanged at 9.4 million short tons,
raw value, up 90,000 tons or about 1.0 percent from 1994/95.  Demand growth
appears to be running only slightly ahead of population growth, compared with
the 1.6 percent growth rate of recent years.  Reduced demand growth is
attributed to encroachment of high fructose corn syrup (HFCS) into traditional
sugar markets and weaker demand for confectionery and bakery products--major
industrial users of sugar.  Sugar use expanded an average of 164,000 tons per
year over the last decade (fiscal 1985/86-1994/95), following the major
contraction in sugar use in the early 1980's due to the substitution of HFCS for
sugar in soft drinks.
 
Reacting to a tight supply situation and firm prices, the Secretary of
Agriculture, on November 9, increased the fiscal 1995/96 tariff-rate-quota (TRQ)
for raw-cane sugar by 330,693 short tons (300,000 metric tons).  This action
raised the TRQ to 1.56 million short tons, and total supply (carryin stocks,
production, and imports) to 11.0 million tons, comparable with the 11.1 million
forecast in September.
 
U.S. raw cane sugar prices averaged 23.21 cents a pound in September and 22.67
cents in October (Contract No. 14, nearby futures), more than 1 cent above the
level for the same months in 1994.  Since the quota increase, prices have
remained firm, averaging 22.60 cents a pound for November and 22.64 cents for
the first 11 market days of December.  As indicated in USDA's press release of
November 9, announcing the quota change, USDA will continue monitoring import
requirements and will adjust the TRQ accordingly.
 
Total U.S. corn sweetener use is expected to reach 11.2 million tons in fiscal
year 1995/96 of which U.S. production is expected to supply 98 percent.  The
United States supplements domestically produced corn sweetener supplies with
imports, mainly from Canada.  USDA forecasts HFCS consumption at 8.0 million
tons, up 3.9 percent from 1994/95.  The consumption forecast for HFCS is based
on projections of deliveries from domestic production and imports.  Using a U.S.
population of 269.2 million (including Puerto Rico), domestic HFCS use is
forecast at 59.3 pounds in fiscal 1995/96, up from 57.7 pounds for last year,
and 45.2 pounds a decade ago.  Per capita sugar consumption is forecast somewhat
higher at 64.6 pounds, refined basis.
 
HFCS-55 and HFCS-42 list prices averaged 18.96 and 16.92 cents a pound, dry
weight basis, respectively, for the period October 1994 through May 1995.  For
the June through September period, prices for HFCS-55 averaged 18.51 cents a
pound, and HFCS-42 prices averaged 16.62 cents. In the past, prices moved up
sharply during the summer due to the high demand for HFCS from the beverage
sector which pushed processing capacity to the limit.  
 
However, this past summer, while demand was strong due to unusually hot summer
temperatures in many parts of the country, prices did not move up.  This
reflects added corn sweetener processing capacity--as much as 25 percent
according to some estimates--that has come on line in the last year.  With the
very sharp downturn in this season's corn crop, HFCS prices have increased.
HFCS-55 prices averaged 19.68 cents a pound in October, and 20.84 cents in
November and for the first 2 weeks of December.  For fiscal 1994/95, wholesale
HFCS-55 averaged 18.81 cents a pound compared with 25.26 cents for refined beet
sugar.  The 6.45 cent price spread between HFCS and refined beet sugar for
1994/95 contrasts to the 2.73 cents the year before.  For fiscal 1995/96, it is
likely that the price spread between HFCS-55 and sugar will narrow. 
 
This issue of the Sugar and Sweetener Situation and Outlook report also contains
a special article entitled "Ukraine's Sugar Industry: Recent Developments and
Future Prospects."  Printed copies of the report should be available in about 1
week.  For further information, contact Peter Buzzanell (202) 219-0888.  Text of
the full report will also be available electronically.  For details, call (202)
219-0515.
 
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