SUGAR AND SWEETENERS                                           March 22, 1995
               Approved by the World Agricultural Outlook Board
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Sugar and Sweetener Situation and Outlook Report.  Commercial Agriculture
Division, Economic Research Service, U.S. Department of Agriculture, SSSV20N1.

Contents:

Summary
World Sugar
Overview
China Sugar Situation Update
U.S. Sugar
Production
Consumption
Trade
Stocks and Prices
Programs
U.S. Corn Sweeteners
Production
Consumption
Trade
Prices
Special Article:
  U.S. Sugar Market:  Recent Trends, Current Situation, and Outlook to the
  Year 2000

Report Coordinator:  Peter Buzzanell (202) 219-0886  FAX (202) 219-0042
Principal Contributors:  Peter Buzzanell, Ron Lord
Database Coordinator/Graphics & Table Design:  Fannye Lockley-Jolly
Layout & Text Design:  Wynnice Pointer-Napper
Word Processing:  Lorie Thomas

Approved by the World Agricultural Outlook Board.  Summary released March 17,
1995.  The next summary of the Sugar and Sweetener Situation and Outlook
report is scheduled for release on June 19, 1995.  Report text may be accessed
electronically through the USDA CID system.  For details, call (202) 720-9045.

Summary

Global sugar production in 1994/95 is forecast to fall short of consumption
for the third straight year.  USDA's revised forecasts for world sugar
production and consumption are 113.6 and 114.1 million metric tons,
respectively.  The implied shortfall of 500,000 tons represents a narrowing of
the deficit from the December estimate of 1.2 million tons.  Low global stocks
and reduced exportable supplies by some key exporters, such as the European
Union (EU) and Cuba, and increased import demand for some key importers,
especially China, help explain the recent run-up in world sugar prices to the
highest level in 5 years.

World sugar production for 1994/95 is projected to 113.6 metric tons, raw
value, up 1.0 million tons from the forecast published in the December Sugar
and Sweetener Situation and Outlook, and 3.6 million tons above the revised
estimate for 1993/94.  The upturn in the 1993/94 forecast is largely
attributed to higher production forecasts for Brazil, Mexico, and the United
States in the Western Hemisphere and Thailand, Pakistan, and Australia in the
Eastern Hemisphere.  These upward revisions more than offset downward
revisions in Poland, Russia, and Ukraine and lower production now expected for
Turkey, Indonesia, and the Philippines.  For Cuba, the forecast remains
unchanged at 3.2 million tons, the lowest since the early 1940's, reflecting
the deterioration of the Cuban economy and its inability to plant, cultivate,
harvest, and process sugarcane efficiently.

Forecast world consumption was raised moderately by 350,000 tons from the
December estimate to 114.1 million tons, 1.0 percent above the revised
estimate for 1993/94.  Growth in sugar consumption is expected to be
particularly strong during 1994/95 in China, India, Indonesia, Pakistan, and
Brazil, which together are forecast to use an additional 1.9 million tons in
1994/95 than a year earlier.  In China, the increase represents a partial
recovery from the apparent decline in sugar use in 1993/94.  In sharp
contrast, sugar consumption is expected to contract in Ukraine and the Russian
Federation, which until recent years ranked among the world's highest per
capita sugar users.  Ukraine's consumption is expected to fall 4.2 percent to
2.3 million tons, compared with 2.7-2.9 million in the early 1990's.  For
1994/95, sugar consumption in the Russian Federation is expected to fall 12.1
percent to 5.1 million tons, largely reflecting high prices.

U.S. sugar production in fiscal year 1995 (October 1, 1994 to September 30,
1995) is forecast at 8.24 million short tons, raw value, up 7.3 percent from
fiscal 1994.  Beet sugar is expected to total 4.65 million, up 14 percent or
560,000 tons from last year, accounting for 56.4 percent of total sugar
production.  According to USDA's Sweetener Market Data (SMD), beet sugar
production for the first quarter of the fiscal year (October-December) totaled
2.12 million short tons or 45.5 percent of the year's estimate.  This is below
the pace of production in recent years and reflects the sizeable quantity of
piled sugarbeets yet to be processed in the Upper Midwest states of Minnesota
and North Dakota.

Cane sugar production (including Puerto Rico) for fiscal 1995, is forecast at
3.59 million tons, marginally above last year and up 50,000 tons from the
December forecast as improved estimates for Louisiana and Texas more than
offset downturns for Hawaii and Puerto Rico.  According to SMD, cane sugar
production for the first quarter of fiscal 1995 totaled 1.82 million tons, 51
percent of the estimate for the year.  This compares with 1.90 million tons
for the first quarter of fiscal 1994 (October-December 1993) which accounted
for 54 percent of the final outturn.  The slower pace this season is largely
attributed to wet weather in Florida, which has delayed cane processing. 
Florida is expected to produce 1.84 million tons, 51 percent of the national
cane sugar production.

U.S. sugar consumption for fiscal 1995 is forecast to reach 9.43 million tons,
raw value, up 1.0 percent or 97,000 tons from the previous year.  The
projection is 50,000 tons below the forecast published in December and
reflects lower-than-expected commercial demand for sugar during the first
quarter of fiscal 1995 (October-December).  SMD places sugar deliveries for
the October-December quarter at 2.29 million tons, marginally below a year
earlier.  First-quarter delivery results represent 24.3 percent of the year's
forecast.  USDA anticipates a strengthening in deliveries, especially during
the second-half of the year (April-September) spurred by heightened seasonal
demand and the general expansion forecast for the U.S. economy.

U.S. sugar stocks on September 30, 1995, are forecast at 1.49 million tons,
down nearly 100,000 tons from the December estimate and largely reflecting
lower sugar imports.  The stocks-to-use ratio is 15.0 percent versus 16.0 in
December.  The March stock forecast includes approximately 258,000 tons of
beet sugar and 53,000 tons of cane sugar in excess of marketing allotments. 
The stocks-to-use ratio without the "blocked stocks" would be 11.9 percent.

The raw sugar price (New York No. 14 contract) averaged 22.05 cents a pound in
fiscal 1994 versus 21.49 the year before.  Prices averaged 21.83 cents for the
first quarter (October-December) of fiscal 1995 and 22.65 for January, 22.69
cents for February, and 22.47 through March 16.  Wholesale refined beet sugar
prices (f.o.b. plant, Midwest markets) averaged 25.60 cents for fiscal 1994
and 25.29 cents for October-December 1994.  Wholesale prices for January and
February averaged 25.50 cents per pound and have remained at that level
through mid-March.

For fiscal 1995, combined production of corn sweeteners (high fructose corn
syrup [HFCS], glucose syrup, and dextrose) is forecast at 11.63 million tons,
dry basis, up 3.7 percent or about 415,000 tons from the previous year.  HFCS
production is forecast at 7.76 million tons, up 4.0 percent or nearly 300,000
tons from the year before.  HFCS-42 is estimated to account for 3.10 million
tons, up 2.2 percent from 1994.

Corn sweetener use in the United States is forecast to total 10.90 million
tons in fiscal 1995, up 3.5 percent from the revised estimate for the previous
year, with HFCS accounting for 70 percent or 7.7 million tons.  HFCS-55 prices
in January and February averaged 18.51 cents a pound, down from 19.7 cents and
24.5 cents from the previous 2 quarters due to the normal seasonal slackening
of demand.  HFCS-55 prices averaged 22.87 cents a pound for fiscal 1994, 2.73
cents below wholesale refined beet sugar.

World Sugar 1/

Overview

Supply Forecasts Improve

USDA's revised forecasts for global sugar production and consumption are 113.6
and 114.1 million metric tons, respectively.  The implied shortfall of 500,000
tons represents a narrowing of the deficit from the December estimate of 1.2
million tons.  Nonetheless, this represents the third straight year of deficit
and stock drawdown and results in a stocks-to-consumption ratio of 15.4
percent, the lowest in more than a decade (table 1).  Low global stocks and
reduced exportable supplies for some key exporters, such as the European Union
(EU) and Cuba, and increased import demand for some key importers, especially
China, help explain the recent run-up in world sugar prices to the highest
level in 5 years.

1/ In this report, world sugar estimates are given in metric tons equal to
2,204.6 pounds or 1,000 kilograms.  U.S. estimates are presented in short tons
equal to 2,000 pounds or 907.185 kilograms.  All estimates are expressed in
raw value,unless otherwise specified.  It takes 107 pounds of sugar, raw
value, to produce 100 pounds of refined sugar.
Production Forecast Raised

World sugar production for 1994/95 is forecast at 113.6 metric tons, raw
value, up 1.0 million tons from the forecast published in the December Sugar
and Sweetener Situation and Outlook, and 3.6 million tons above the revised
estimate for 1993/94 (table 1).  The upturn in the 1994/95 forecast is largely
attributed to higher production forecasts for Brazil, Mexico, and the United
States in the Western Hemisphere and Thailand, Pakistan, and Australia in the
Eastern Hemisphere.  The upward revisions more than offset downward revisions
in Poland, Russia, Ukraine, Turkey, Indonesia, and the Philippines.  For Cuba,
the forecast remains unchanged at 3.2 million tons, the lowest since the early
1940's, reflecting the deterioration of the Cuban economy and its inability to
plant, cultivate, harvest, and process sugarcane efficiently.

Forecast world consumption was raised moderately by 350,000 tons from the
December estimate to 114.1 million tons, 1.0 percent above the revised
estimate for 1993/94.  Growth in sugar consumption is expected to be
particularly strong during 1994/95 in China, India, Indonesia, Pakistan, and
Brazil, which together are forecast to use an additional 1.9 million tons in
1994/95 than a year earlier.  In China, the increase represents a partial
recovery from the apparent decline in sugar use in 1993/94.

In sharp contrast, sugar consumption is expected to contract in Ukraine and
the Russian Federation, which until recent years ranked among the world's
highest per capita sugar users.  Ukraine's consumption is expected to fall 4.2
percent to 2.3 million tons, compared with 2.7-2.9 million in the early
1990's.  Part of the recent per capita contraction in Russia is explained by
declining use of sugar for home alcohol distillation due to the heightened
availability of cheap foreign vodka.  For 1994/95, sugar consumption in the
Russian Federation is expected to fall 12.1 percent to 5.1 million tons,
reflecting high prices and the increased availability of sugar-containing
product imports, particularly confections.  Countering these trends, the new,
restrictive Russian excise tax on alcoholic beverages, which came into effect
at the beginning of the year, should contribute to an increase in the
production of moonshine (samogon), whose principal ingredient is sugar.

Brazil's sugar production forecast for 1994/95 is a record 12.2 million tons,
up 1.7 million tons from the December estimate and 2.3 million above the
previous year.  Both of Brazil's producing areas--the Central South (harvest
May-October) and the North/Northeast (harvest September-March)-- have
experienced excellent harvest and milling seasons.  Moreover, the strong
upturn in world prices has encouraged a significant volume of cane to shift
from ethanol to sugar production.  This trend has been facilitated by
investment of many ethanol plant owners in equipment to produce sugar.  With
the upturn in production, Brazil's export forecast, about 25 percent raw and
75 percent refined, is 3.6 million tons, up nearly 30 percent from the earlier
estimate.

Thailand's sugar production is forecast at 4.9 million tons, up 200,000 tons
from the previous estimate and approaching the 1991/92 record.  According to
Thai industry reports, sugar mill production during November through February
was nearly 20 percent above the same period in 1993/94.  Labor shortages
plague the harvesting of the sugarcane crop and might drag the harvest to the
end of April.  With only about one-fourth of production needed for domestic
use, most of the increased production will move into the export market, with
total exports now forecast at 3.5 million tons.

Australia's sugar production for 1994/95 is forecast at a record 5.1 million
tons, up 85,000 tons from the December estimate and 610,000 above last year. 
A 6-percent increase in area planted and good harvest conditions in most
areas, led to a cane crush of just over 35 million tons, the third consecutive
year of record production.  Raw cane sugar exports, mainly going to markets in
the Pacific Rim such as Japan, China, Korea, Malaysia, Canada, and the United
States, are forecast at 4.1 million tons, second only to the EU.

Pakistan's sugar industry also continues to expand, with production revised
upward by 300,000 tons since December to a record 3.6-million, compared with
3.1 million last year and an average of 2.4 million in 1990-1993.  The
production growth has outpaced consumption, causing Pakistan to shift from
being a net importer to an exporter of an estimated 600,000 tons this season.

Largely unchanged is the aggregate production for the EU-12 at 15.5 million
tons, nearly 100,000 tons above the December estimate, but well below the 17.4
million produced last season (table 2). 2/   The sharp reduction in production
this season was caused largely by a severe summer drought.  EU exports are
expected to fall 15 percent to 5.4 million tons, compared with 6.3 million in
1993/94.  Other European countries also suffered weather-related lower
production this season, most notably Turkey, Poland, Ukraine, and the Russian
Federation.  Turkey's crop is forecast at 1.9 million tons, down 150,000 tons
from December and the first sub-2.0 ton crop since 1990/91.  The downturn is
expected to shift Turkey from net exporter status to net importer in 1994/95. 
Poland is also expected to shift from being a small exporter to importing
about 100,000 tons of sugar.  Ukraine is expected to export only 1.7 million
tons because of reduced exportable supplies.  Russia and the other countries
of the former Soviet Union are the primary markets.

2/  As of January 1, 1995, the EU gained three new members--Austria, Finland,
and Sweden.  Sugar production for the EU-15 is 16.5 million tons.

Sugar production for the Russian Federation has been trimmed to 1.65 million
tons, down from 2.0 million in December and 2.7 million tons in 1993/94.  The
decrease in the 1994/95 estimate was due to reduced sugarbeet plantings, poor
weather, and shortages of production inputs.  With consumption difficult to
assess but placed at 5.1 million tons, imports, a combination of both refined
sugar primarily from Ukraine and the EU and raw sugar largely from Cuba, are
expected to total 2.9 million tons, representing the world's largest import
market (table 3).

China remains a major question in the global sugar market.  With the 1994/95
production forecast at 6.2 million tons, unchanged from December, the level of
China's import activity is a major factor in the current strength of world
sugar prices (see text box on China).  Table 11 provides sugar supply-demand
data for 42 individual countries.

Prices Remain Strong

World prices for raw sugar (f.o.b. Caribbean, contract No. 11) averaged 14.87
cents a pound in January, 14.43 cents in February, and 14.58 cents for the
first half of March, more than 4.5 cents above those months a year ago. 
Prices averaged 12.13 cents in calendar 1994, compared with 10.03 cents in
1993, and just over 9 cents for the previous 2 years.  The upward movement of
prices for world refined sugar has been just as strong.  The London price
(f.o.b. Europe, contract No. 5) averaged 18.75 cents ($413.40 per metric ton)
in January and 18.17 cents in February, up 5.5 and 4.1 cents, respectively,
for those months in 1994.  Prices in the fourth quarter of 1994 (October-
December) averaged 17.29 cents, up 11.3 percent from the previous quarter and
31.8 percent or 4.2 cents above the corresponding quarter in 1993.

This price surge is attributed to world sugar production lagging behind
consumption for the third year in a row.  This season, the steep falls in
European, Cuban, and Chinese production have reduced exportable supplies.  The
strong import demand from India, despite a large 1994/95 crop, and China have
added to market tightness.  However, this has been offset somewhat by recent
upward adjustments in the 1994/95 production levels for three major exporters,
Brazil, Australia, and Thailand.

In the near term, price levels appear to pivot largely on the level of buying
by China and Russia.  The prospects for planting and development of the spring
sugarbeet crops in the Northern Hemisphere--Western Europe, Russia, Ukraine,
the United States, and China--and the production levels of the new cane sugar
crops by the Southern Hemisphere's major sugar exporters--Australia, Brazil,
and South Africa--will weigh heavily on the direction of prices.


U.S. Sugar

Production

Record Beet Sugar Production Expected

U.S. sugar production in fiscal year 1995 (October 1, 1994 to September 30,
1995) is forecast at 8.24 million short tons, raw value, up 7.3 percent from
fiscal 1994.  Beet sugar is expected to total 4.65 million, up 14 percent or
560,000 tons from last year, accounting for 56.4 percent of total sugar
production.  Cane sugar production (including Puerto Rico) is forecast at 3.59
million tons, marginally above last year as improved outturns in Florida and
Louisiana largely offset an expected downturn in Hawaii.  USDA's survey-based
estimates for the sugar crop harvested acreage, yield, and sugarbeet and
sugarcane production through the 1994 crop are provided in tables 6 and 7.

Since the December forecast, beet sugar production was revised down 50,000
tons to account for below-average recovery of sugar from beets because of wet
weather late in the growing season in Minnesota and North Dakota, and warm
weather which caused deterioration of beets in storage in parts of Idaho and
eastern Oregon.  According to USDA's Sweetener Market Data (SMD), beet sugar
production for the first quarter of the fiscal year (October-December) totaled
2.12 million short tons or 45.5 percent of the year's estimate.  This is below
the pace of production of recent years and reflects the sizeable quantity of
piled sugarbeets yet to be processed in the Upper Midwest states of Minnesota
and North Dakota.

Of total forecast beet sugar production for fiscal 1995, an estimated 260,000
tons is expected to be derived from the desugaring of beet molasses.  Ion
exclusion systems for desugaring molasses have been installed at several beet
processing facilities across the United States over the past 7 years.  These
plants generally operate after the normal beet slicing and sugar production
campaign has been completed.  Six desugaring facilities, all owned by separate
beet sugar processors, operated in fiscal 1994, one each in Ohio, Nebraska,
Texas, Idaho, and two in Minnesota.  This spring a seventh ion exclusion
facility will begin operation at the Spreckels Sugar Company's Mendota,
California plant.  The Mendota factory will draw on molasses generated there,
as well as the company's plants at Manteca and Woodland, California.  The
Amalgamated Sugar Company is expected to start operating a second ion
exclusion plant in the fall of this year.  The new plant is being constructed
in Nampa, Idaho.

With a significant share of U.S. beet molasses now being desugared, imports of
both cane and beet molasses have been on the rise.  Calendar 1994 molasses
imports totaled 1.65 million metric tons, up nearly 60 percent from 1993. 
Beet molasses is used in animal feed formulations and other specialized
industrial uses, such as the manufacture of yeast.  Also contributing to
higher molasses imports in 1994 was the continuing downturn in cane molasses
from Hawaii for West Coast users and high corn prices, following the short
1993/94 corn crop, which made molasses relatively more attractive for
feedstuffs.

In another important beet sugar sector development, Minn-Dak Farmers
Cooperative headquartered in Wahpeton, North Dakota recently announced a
significant expansion program estimated to cost $63 million.  The project
calls for the Wahpeton beet sugar processing facility to expand by one-fourth
from the current 5,900-ton daily slicing capacity to 7,500 tons.  Contracted
acreage is to increase from 71,200 acres to 97,500 acres over a 3-year period
starting with the 1996 crop.  One goal of the expansion project is to maintain
and/or improve returns to growers as the cooperative spreads fixed costs over
a greater volume of sugarbeets being processed.  In addition to adding
processing capacity, the project will increase cold storage for beets under
ventilation and build three sheds for cold storage of beets.  Each cold
storage shed would hold 75,000 to 100,000 tons of beets and enable the
cooperative to ensure minimum sucrose loses from the spoilage of piled beets,
as well as enable the organization to spread its processing campaign into
April.

Cane Sugar Production Steady

Cane sugar production for fiscal 1995 is forecast at 3.59 million tons, up
50,000 tons from December, as improved estimates for Louisiana and Texas more
than offset downturns for Hawaii and Puerto Rico.  According to SMD, cane
sugar production for the first quarter of fiscal 1995 totaled 1.82 million
tons, 51 percent of the estimate for the year.  This compares with 1.90
million tons for the first quarter of fiscal 1994 (October-December 1993),
which accounted for 54 percent of the final outturn for the year.

The slower pace this season is largely attributed to wet weather in Florida
which delayed cane processing.  Florida is expected to produce 1.84 million
tons, 51 percent of the national cane sugar production.  Florida's cane sugar
production for the first quarter of fiscal 1995 totaled 644,000 tons or 35
percent of the forecast for the year.  In contrast, 799,000 tons or 45 percent
of fiscal 1994 production was produced during October-December 1993. 
Processing of this season's crop is expected to run through mid-April.

Louisiana's production is estimated at a record 1.02 million tons, up 7.4
percent from the December estimate and 14.2 percent higher than the outturn in
fiscal 1994.  Louisiana's sugarcane harvesting and sugar production is
concentrated in the October-December quarter.  According to Louisiana sugar
industry officials, the exceptional yields achieved were largely attributed to
abnormally dry weather during the harvest season.  Not only did the low
rainfall result in higher sugar recovery, but also growers report
substantially lower harvesting costs.

In contrast, the production forecast for Hawaii, which produces sugar year
round, was reduced to 540,000 tons, 25,000 below the December estimate and
165,000 tons below fiscal 1994.  The downturn from fiscal 1994 is explained by
the permanent closing of three mills due to high costs, and the shift of
acreage out of sugarcane.  The production estimate reduction since December
reflects the lower-than-anticipated output during the October-December
quarter.  SMD reports total Hawaiian production for the first quarter of
fiscal 1995 at only 91,000 tons compared with 140,000 the year before.

On a positive note for Hawaii's sugar industry, the Alexander and Baldwin
Company (A&B), in January, announced plans to increase production and
efficiency at its Hawaiian Commercial and Sugar Company (HC&S) sugarcane
plantation on the island of Maui.  The four-step program is designed to
increase cultivated acreage, as well as boost yields through improved farming
practices and enhanced processing techniques.  HC&S has leased an additional
1,300 acres of land previously used for planting pineapples and is also
planning to shift some existing HC&S land into sugarcane this year.  HC&S is
also increasing the planting of new, high-yielding cane varieties which should
spur increased sugar production.  At its Puunene mill on Maui, HC&S has
invested $4 million on a new, patented sugar extraction technology.  The new
ultra-filtration and juice softening system will eventually allow HC&S to
extract an additional 45,000 tons of sugar that was previously unrecovered,
the equivalent of farming 2,100 acres of land.  In 1994, HC&S, the largest
sugar plantation in Hawaii, produced 206,000 tons, 31 percent of the state
total, from 36,000 acres on central Maui.
Consumption

Deliveries Forecast Reduced

USDA expects U.S. sugar consumption for fiscal 1995 to reach 9.43 million
tons, raw value, up 1.0 percent or 97,000 tons from the previous year.  The
projection is 50,000 tons below the forecast published in December and
reflects lower-than-expected commercial demand for sugar during the first
quarter of fiscal 1995 (October-December).

SMD places sugar deliveries for the October-December quarter at 2.29 million
tons, marginally below a year earlier.  First-quarter delivery results
represent 24.3 percent of the forecast for the year.  USDA anticipates a
strengthening in deliveries, especially during the second-half of the year
(April-September) spurred by heightened seasonal demand and the general
expansion forecast for the United States economy.  The implementation of the
Uruguay Round trade agreement on January 1, 1995, will have the effect of
restricting imports of some sugar-containing products from Canada, which could
boost U.S. deliveries.

The breakdown of deliveries between beet and cane sugar shows beet sugar at
926,600 tons for the October-December quarter, 41 percent of the total, and
cane sugar, 59 percent.  Beet sugar deliveries were down 8.1 percent from the
corresponding quarter a year earlier and 23 percent below the July-September
quarter.  In contrast, cane sugar deliveries totaling 1.36 million tons for
the October-December quarter were up 5.1 percent from the first quarter of
fiscal 1994 and comparable to the fourth quarter (July-September) of fiscal
1994.  The quarter's abnormally weak beet and strong cane deliveries can
largely be explained to the imposition of domestic marketing allotments on
October 1.  For fiscal 1994, when allotments were not in effect, combined
deliveries totaled 9.33 million tons of which beet sugar accounted for 4.26
million or 46 percent of the total and cane sugar the remainder.

Analysis of sugar deliveries to major industrial users also helps to explain
the direction of demand (table 8).  Sugar deliveries to industrial users for
the October-December quarter were 1.12 million tons, refined basis, marginally
lower than October-December 1993.  Deliveries were particularly weak to the
bakery-cereal and confectionery industries, which in recent years have
accounted for about two-thirds of total industrial demand.  The growing
economy and the normal strengthening of demand to these industrial users
during the second-half of the fiscal year is expected to contribute to the
forecast growth in total sugar consumption for fiscal 1995.

Trade

Quota Availability Adjusted Upward, Non-Quota Imports for Reexport Lowered

U.S. sugar imports for fiscal 1995 are forecast at 1.86 million tons, down 6.7
percent from the December estimate.  Changes have been made to both tariff
rate quota (TRQ) import and non-quota import estimates.  TRQ imports in fiscal
1994 have been adjusted downward by 66,000 tons to 1.11 million because of a
revision in the data received by USDA from U.S. Customs.  This results in a
higher estimate for sugar available for entry under quota for fiscal 1995--
1.32 million tons forecast in December versus 1.39 million in March.  In
contrast, the forecast for non-quota sugar imports under USDA's refined sugar
reexport program were revised downward by 200,000 tons to 400,000 tons.  The
expected downturn in non-quota import activity this season is explained by the
current high world sugar price versus lower raw sugar futures prices for 1996.

Despite the increased availability of TRQ imports, the actual pace of entries
has been slow.  This is explained by high world sugar prices which has
fostered several U.S. quota holding countries to defer shipments.  TRQ sugar
entries from August 1, 1994 through March 5, 1995, totaled 590,901 short tons,
leaving 865,607 tons of the quota yet to be entered in the 14-month quota year
which ends September 30.  Among the six largest quota holders--Dominican
Republic, Brazil, the Philippines, Australia, Guatemala, and Argentina, which
together have 59 percent or 865,718 tons of the quota, only 307,449 tons or 36
percent have entered.  The Philippines, the third largest quota holder, with
185,511 tons, has yet to enter any sugar.  USDA's estimate of expected TRQ
shortfalls for the quota covering fiscal 1993, 1994, and 1995, is 120,000
tons, much of which is likely to represent small quota holders which do not
possess adequate domestically produced sugar to meet domestic needs and other
export obligations.

Exports Somewhat Higher

U.S. sugar exports for fiscal 1995 are forecast at 510,000 tons, 15,000 tons
above the December estimate and 56,000 tons above fiscal 1994.  Of total sugar
exports, 470,000 tons are expected to be refined sugar shipments under the
reexport program, up 9 percent from last year.  An estimated 40,000 tons of
exports are expected to come outside the reexport program, up from 25,000 tons
in December, and mainly are beet sugar exports to Canada of "blocked" beet
sugar stocks resulting from implementation of USDA's sugar marketing
allotments on October 1, 1994.  According to SMD for the first quarter of
fiscal 1995 (October-December), 101,013 tons were exported, accounting for 20
percent of the forecast for the year.

Stocks and Prices

Sugar stocks on September 30, 1995, are forecast at 1.49 million tons, down
nearly 100,000 tons from the December estimate and largely reflecting lower
sugar imports.  The stocks-to-use ratio is 15.0 percent versus 15.96 in
December.  The March stock forecast includes approximately 258,000 tons of
beet sugar and 53,000 tons of cane sugar in excess of marketing allotments. 
The stocks-to-use ratio without the "blocked stocks" would be 11.9 percent. 
This compares with ending stocks for fiscal 1994 (beginning stocks for fiscal
1995), of 1.34 million tons and a stocks-to-use ratio of 13.63 percent.

Of total stocks held by primary distributors on October 1, beet processors
held 435,000 tons or 33 percent.  This was down by 39 percent from a year
earlier due to the aggressive marketing of fiscal 1994 beet sugar production
and the lack of marketing allotments in fiscal 1994.  The remaining October 1
stocks were held by cane mills (26 percent) and cane refiners (41 percent). 
Approximately 6,000 tons were held by USDA's Commodity Credit Corporation
(CCC) from sugar forfeited to CCC by beet sugar processors.

By January 1, 1995, total stocks had climbed to 3.15 million tons as beet
sugar processors filled their storage facilities with new crop sugar, bringing
total beet sugar stocks to 1.54 million, 50 percent of total stocks.  Cane
sugar refiners and sugar mills held 1.55 million, while the CCC still held
approximately 6,000 tons.  The CCC has repeatedly tendered the forfeited sugar
for sale, but bids have been rejected as offers were apparently well below
recent market prices for the West Coast, and the CCC has been unwilling to
sell the sugar at such a discount to the market.

Stocks are expected to grow as new crop production fills storage bins.  The
high point of stocks during the year is normally April 1, the beginning of the
third quarter.  Stocks are then drawn down to meet domestic demand and are
usually at their low point at the end of the fiscal year.

Raw Sugar Prices Strengthen

The raw sugar price (New York No. 14 contract) averaged 22.05 cents a pound in
fiscal 1994 versus 21.49 the year before.  Prices averaged 21.83 cents for the
first quarter of fiscal 1995 (October-December), and 22.65 for January, 22.69
cents for February, and 22.47 cents through March 16.  Wholesale refined beet
sugar prices (f.o.b. plant, Midwest markets) averaged 25.60 cents for fiscal
1994 and 25.29 cents for October-December 1994, according to Milling and
Baking News.  Wholesale prices for January and February averaged 25.50 cents
per pound and have remained at that level through mid-March.

Several factors may influence the direction of raw cane sugar and refined beet
sugar prices over the next several months.  First, the condition of piled
beets yet to be processed.  Second, the pace of TRQ sugar imports and reexport
program shipments that may be influenced by world sugar price movements. 
Third, the strength of sugar deliveries over the next quarter.  Fourth, USDA's
quarterly review of marketing allotments scheduled to be completed by the end
of March.  Fifth, the level of U.S. sugarbeet planting intentions to be
released by USDA on March 31.  Early indications are that sugarbeet acreage
planted this spring for the 1995/96 crop will be about unchanged from 1994/95. 
While some areas are expected to expand somewhat, such as California, most
other areas are expected to remain unchanged or perhaps decline slightly,
reflecting the prospects of stock carry-over due to marketing allotments and
capacity constraints at factories.  In Texas, sugarbeet acreage may remain
depressed because high cotton prices are likely to encourage farmers to plant
more cotton.

Programs

Sugar Marketing Allotments Continued

On December 30, USDA announced that after a quarterly re-estimation of U.S.
sugar consumption, stocks, production, and imports, marketing allotments
should continue for fiscal 1995.  Based on the December supply-demand-price
situation, reasonable ending stocks were estimated to total 1.172 million
short tons, down 106,000 tons from the September estimate.  This results in
the overall allotment quantity (OAQ) continuing unchanged at 7.889 million
short tons.

The weights assigned to the three-factor criteria for setting allotments
between the beet and cane sugar sectors--past marketings, processing capacity,
and ability to market--remained unchanged at 25 percent, 25 percent, and 50
percent, respectively.  Based on updated production estimates, the beet sugar
percentage share of the OAQ is 55.17 percent, totaling 4.352 million tons,
down marginally from the September level.  The raw cane sugar percentage share
and allotment levels were up marginally at 44.83 percent and 3.537 million
tons.  The marginal change in beet-cane shares results from a slightly higher
percentage increase in the 1994-crop cane versus beet sugar production
forecasts, and slightly higher cane processing capacity as a result of revised
cane data in crop years 1989-93.

In addition to sugar, marketing allotments also cover crystalline fructose
according to the Farm Act of 1990.  The allotment for crystalline fructose is
also unchanged at 159,757 short tons.  The next re-estimation of the need for
marketing allotments, and if needed, allotment levels, will be made by the
beginning of the April-June quarter.

Sugar Loan Rates Announced

On January 26, USDA announced the national (weighted average) price-support
loan rates for the 1994 crop.  For domestically grown sugarcane, the loan rate
is 18 cents per pound for raw cane sugar and for sugarbeets the loan rate is
23.43 cents per pound for refined beet sugar.  The new loan rate for cane
sugar is unchanged from last year, while the beet sugar rate is down slightly
(table 9).  Regional loan rates for sugarbeets and by State for sugarcane are
provided in table 10.

The 1990 Farm Act requires the beet loan rate to be set at a level that
reflects an amount that bears the same relation to the support level for
sugarcane as the weighted average of producer returns for sugarbeets bears to
the weighted average of producer returns for sugarcane, expressed on a cents
per pound basis for refined beet sugar and raw cane sugar.  The most recent 5-
year period for which data are available is used in the calculation, plus an
amount that covers sugarbeet processor fixed marketing expenses.

Given the lateness of the announcement of the loan rate (January rather than
the usual July), the most recent 5-year period included 1993/94.  Beet returns
were down last year due to weaker refined sugar prices.  Thus, the 5-year
average ratio of beet and cane returns USDA used was 1.23 rather than the 1.26
anticipated earlier.  USDA's calculation of the 1994/95 beet sugar loan rate
was as follows:

Cents per pound
o  1994 national average raw sugar loan rate 18.00
o  1989-93 weighted-average returns to beet growers  15.28
o  1989-93 weighted-average returners to cane growers  12.42
o  1994 fixed marketing expenses for beet sugar  1.29
Therefore:
(18.00 X 15.28 ) + 1.29 = (18.00 X 1.23) + 1.29 = 23.43
                    12.42

U.S. Corn Sweeteners 3/

Production

Corn Grind for Sweeteners Continues To Expand

For marketing year 1994/95 (September 1994-August 1995), the U.S. corn grind
for sweeteners is forecast at 695 million bushels or 19.46 million short tons,
up 2.2 percent from the December estimate and 4.5 percent from the previous
season. 4/  The 1994/95 U.S. corn crop totaled a record 10.10 billion bushels,
up sharply from the weather reduced 1993/94 crop of 6.34 million.  A record
corn yield of 138.6 bushels per acre, up 37.6 percent from 1993/94, and
expanded harvested acreage totaling 72.9 million acres, up 15.9 percent from
last year, explain the significant rebound in corn production.  The corn wet-
milling industry is expected to utilize 9.35 percent or 945 million bushels of
the forecast corn crop, with corn sweeteners accounting for 74 percent of the
total. 5/

3/ In this report, U.S. corn sweetener estimates are given in short tons, dry
basis, unless otherwise specified.  It is assumed HFCS-42 contains 71 percent
solids; HFCS-55, 77 percent solids; glucose syrup, 80.3 percent solids; and
dextrose--assumed to be monohydrate--92 percent solids.
4/ It is assumed one 56-pound bushel of number 2, yellow dent corn, the type
used by U.S. wet millers, will yield approximately 33.33 pounds of corn
sweetener, dry basis.  The means, on average, 60, 56-pound bushels of corn are
needed to produce on short ton of corn sweetener, dry basis, whether HFCS,
glucose syrup, or dextrose.
5/ Estimate does not include corn used for wet milling or dry milling for
ethanol production.

The expansion in the use of corn for wet-milling is facilitated by a large and
expanding national production capacity.  At the beginning of 1994/95, 16
facilities, mostly located in the Corn Belt, were operational to produce high
fructose corn syrup (HFCS).  Eleven plants were on line to wet-mill corn for
glucose syrup and four facilities to produce crystalline dextrose.  U.S.
capacity to produce HFCS at the beginning of the season was 9.1 million tons,
and glucose and dextrose capacity combined was between 4.3 and 4.8 million
tons.

Since the fall of 1994, there have been several capacity expansion
announcements.  In late November 1994, Archer Daniels Midland (ADM) announced
completion of a 700-million-pound or 350,000 short ton expansion of HFCS-55
capacity at their Clinton, Iowa plant.  Similar HFCS-55 expansion is scheduled
to be completed in 1995 at ADM's Cedar Rapids, Iowa facility and HFCS-42
expansion at its Decatur, Illinois plant.  Once complete, the $70 million
expansion projects will raise ADM's annual HFCS capacity by 2.2 billion pounds
or 1.1 million tons.  On November 25, Minnesota Corn Processors (MCP)
announced a $265-million plan to expand their corn wet-milling plants at
Marshall, Minnesota and Columbus, Nebraska.  At the Marshall plant, with
current grind capacity of 60,000 bushels per day, the daily grind will be
raised by 80,000 bushels to produce HFCS-42, as well as HFCS-55.  At Columbus,
with current capacity of 120,000 bushels per day, an 80,000 bushel capacity
will be added to expand HFCS-42 and add HFCS-55 produce.  If used for HFCS,
the expanded grind could produce about 1.9 billion additional pounds or
950,000 tons.

In late December, A.E. Staley Manufacturing Company announced three expansion
projects at a cost of $45 million.  Staley's South Lafayette, Indiana plant
will expand grind by 65,000 bushels per day, and produce annually an
additional 1 billion pounds or 450,000 tons of HFCS.  The North Lafayette or
Sagamore plant will add 134,000 tons of modified starch capacity.  Staley also
announced a complete modernization project for its Decatur, Illinois starch
processing plant.  All three projects are expected to be completed by June
1995.

In early January, Cargill Inc. announced that its new facility at Blair,
Nebraska will begin producing ethanol and HFCS by the end of March, 1995.  The
new facility has an initial daily grind capacity of between 100,000 to 120,000
bushels.  The Blair plant is one piece of an on-going Cargill expansion
program adding more than 300,000 bushels of daily grind capacity to the
company's wet-milling division by 1996.

Lastly, on March 14, ProGold announced plans to build a new corn-wet milling
facility at Wahpeton, North Dakota.  The $260-million facility, expected to be
operational in late 1996, will begin grinding about 72,000 bushels of corn per
day to produce a variety of corn sweeteners and ingredient products.  ProGold
is owned by Golden Growers Cooperative, a new corn-growers cooperative,
American Crystal Sugar Company, and Minn-Dak Farmers Cooperative.

HFCS Production Higher

For fiscal 1995 (October 1, 1994-September 30, 1995), combined production of
corn sweeteners (HFCS, glucose syrup, and dextrose) is forecast at 11.63
million tons, dry basis, up 3.7 percent or about 415,000 tons from the
previous year.  This forecast has been revised from 12.0 million published in
December, reflecting significant downward adjustments in projected glucose
syrup and dextrose production.

HFCS production is forecast at 7.76 million tons, up 4.0 percent or nearly
300,000 tons from the year before.  For the first quarter of fiscal 1995
(October-December), 1.70 million tons were produced or 21.9 percent of the
estimate for the year.  Because of the normal increased seasonal use of HFCS
in the warmer months of the year (April-September), the outturn in the first
and second quarters are normally well below the third and fourth fiscal
quarters.  Of total expected production of HFCS for fiscal 1995, HFCS-42 is
estimated to account for 3.10 million tons, up 2.2 percent from 1994, and
HFCS-55 is forecast at 4.66 million, 5.2 percent higher than 1994.  HFCS-42
production for the October-December quarter totaled 659,000 tons and HFCS-55,
1.04 million.

Glucose syrup and dextrose production for fiscal 1995 are projected at 3.15
million and 718,860 tons, respectively totaling 3.87 tons. 6/  USDA's December
forecast was 4.25 million.  The substantial downward revision is explained by
new information provided by several industry sources and release of the U.S.
Census of Manufacturers report on the U.S. Corn Wet Milling Industry in late
1994. 7/  For the first quarter of fiscal 1995, glucose syrup production
totaled 737,989 tons, up 1.6 percent from the year before, and represents 23.4
percent of the revised forecast for fiscal 1995.  Dextrose production totaled
172,463 tons, up 5.5 percent from October-December 1993, and represents 24.0
percent of the 1995 forecast.  In contrast to HFCS, glucose syrup and dextrose
production and use do not display as strong a seasonal pattern.

6/ Glucose syrup data include estimates for glucose syrup solids and
maltodextrin, in addition to glucose syrup.
7/ The U.S. Census report of the Corn-Wet Milling Industry (SIC-246) is based
on 1992 data.  The survey is conducted every 5 years and provides useful
benchmarks on annual production levels.
Consumption

Strong HFCS Expansion Continues

Corn sweetener use in the United States is forecast to total 10.90 million
tons in fiscal 1995, up 3.5 percent from the revised estimate for the previous
year. 8/  This represents a 360,000-ton change from the December projection
and reflects downward adjustments of the data series for both glucose syrup
and dextrose.  HFCS deliveries are forecast to total 7.66 million tons, up 3.8
percent from fiscal 1994.  For the first quarter of fiscal 1995 (October-
December), HFCS deliveries totaled 1.68 million tons or 21.9 percent of the
estimate for the year.  During the past 5 years, the annual average increase
in HFCS deliveries was 4.4 percent.  This growth in HFCS use is being fostered
largely by strong demand for  both traditional carbonated beverages, as well
as the rapidly growing demand for "new age" beverages (teas, sports-drinks,
fruit-type).

8/  Domestic deliveries of corn sweeteners in this report are limited to those
for domestic food and beverage use only, and do not include deliveries for
domestic nonfood use.

Domestic food and beverage use of HFCS-55 is forecast at 4.59 million tons in
fiscal 1995, up 4.8 percent from the previous year.  HFCS-55 deliveries for
the first quarter totaled 1.03 million tons.  With strong seasonal demand
expected from the beverage industry, quarterly deliveries are expected to
strengthen during the April-September period.  HFCS-42 use is forecast at 3.07
million tons for the year, up 2.3 percent from a year ago.  First-quarter
deliveries totaled 653,000 tons, comparable with the year before.  Similar to
HFCS-55, demand for HFCS-42 tends to be stronger during the second-half of the
fiscal year.

The forecast for glucose syrup use in fiscal 1995 is 2.72 million tons, up 2.8
percent from the revised estimate for 1994.  First quarter glucose syrup
deliveries totaled 637,852 tons, 23.4 percent of the forecast for the year. 
Dextrose use is expected to expand by 2.9 percent to 521,600 tons.  First-
quarter results totaled 125,450 tons, 24 percent of the fiscal forecast. 
Unlike HFCS, glucose syrup and dextrose use patterns display less seasonality. 
These corn sweeteners are used primarily in processed foods, confections,
canning, preserves, and baking.

Trade

First Quarter Fiscal 1995 Exports Weaken, But Less Than Imports

U.S. trade in corn sweeteners remains relatively small compared with total
domestic production and use.  For fiscal 1994, corn sweetener exports totaled
202,599 tons, up 35.6 percent from fiscal 1993 largely due to increased
exports to Mexico.  Of total corn sweetener exports, HFCS shipments (HFCS-42,
55, and crystalline fructose) accounted for 134,820 tons or about two-thirds
of the total, with exports of glucose syrup of 39,829 tons or 20 percent and
dextrose 27,950 tons, or the remaining 14 percent.  For the first quarter of
fiscal 1995 (October-December 1993), corn sweetener exports totaled 55,078
tons, slightly below the pace of a year ago (October-December 1993).  HFCS
exports are expected to remain strong.  Exports to Canada, if past history is
a guide, should rise as more HFCS is used in Canada as a substitute for higher
priced world sugar.  The major unknown is the impact the recent devaluation of
the peso will have on U.S. corn sweetener exports to Mexico, particularly
HFCS.

U.S. corn sweetener imports in fiscal 1994 totaled 126,477 tons, down from
210,298 tons in fiscal 1993.  This 40 percent year-to-year decline is largely
attributed to a sharp decline in HFCS-55 imports, from 173,617 tons in fiscal
1993 to 87,915 in fiscal 1994.  The decline is explained by improved demand
for HFCS in Canada due to the rise in world sugar prices.  For the first
quarter of fiscal 1995 (October-December), corn sweetener imports totaled
28,758 tons, compared with 48,929 tons for the corresponding quarter in fiscal
1994.  The contraction in imports is largely due to sharply lower HFCS-55
(11,794 tons versus 40,705 tons) imports that more than offset higher HFCS-42,
glucose syrup, and dextrose imports.

Prices

HFCS Prices Weaken Seasonally

Wholesale list prices for HFCS-55 averaged 22.87 cents per pound (Midwest
markets, dry basis) in fiscal 1994, up 11 percent from the year before,
reflecting higher corn prices due to the short 1993/94 crop and strong
beverage demand in April-September.  For the first quarter of fiscal 1995,
HFCS prices dropped to 19.70 cents a pound, down nearly 20 percent from the
previous quarter.  October-December and January-March are the slack capacity
quarters for HFCS-55 production and use, typically leading to seasonal price
declines.

Displaying a similar pattern, HFCS-42 prices averaged 20.59 cents per pound
for fiscal 1994, up 11 percent from 1993, then dropped to 17.50 cents for the
first quarter of fiscal 1995.  Normally HFCS-42 is priced 2-to-3 cents a pound
under HFCS-55.  For fiscal 1994, HFCS-55 and HFCS-42 underpriced wholesale
refined beet sugar prices by 2.7 and 5.0 cents, respectively.  For the first
quarter of fiscal 1995, the price spread widened to 5.6 and 7.8 cents,
respectively.

List prices for glucose syrup, the least expensive corn sweetener, averaged
15.11 cents a pound in fiscal 1994, up 21 percent from fiscal 1993.  October-
December 1994 prices slipped to 14.88 cents.  Dextrose list prices averaged
25.56 cents for fiscal 1994 and 25.79 cents for the first quarter of fiscal
1995.

Corn sweetener prices are expected to strengthen again in the high demand
April-September period.  However, with a record 1994/95 corn crop and higher
installed capacity, the normal price upturn may be dampened somewhat.  HFCS-55
prices in fiscal 1994 for April-September were 17 percent higher than October-
March.

Net Corn Costs Expected To Decline

Corn prices, and net corn costs, are expected to decline significantly in
fiscal 1995.  The official USDA forecast of the season-average price received
by farmers for field corn in marketing year September 1994/August 1995 is
$2.15 to $2.25 a bushel, with a derived mid-point of $2.20, down from $2.50 in
1993/94.

The Central Illinois price for No. 2 yellow dent corn averaged $2.54 per
bushel during fiscal 1994, up from $2.13 in fiscal 1993.  For fiscal 1995,
first-quarter prices (October-December) averaged $2.04 compared with $2.57 for
the corresponding quarter in fiscal 1994.  The lower corn prices do not
necessarily translate into identical declines for net corn and net corn
sweetener costs.

For the major corn byproducts, corn oil, corn gluten feed, and corn gluten
meal, prices are mixed.  Corn oil prices averaged 26.80 cents a pound during
fiscal 1994, up 28 percent from fiscal 1993.  October-December prices averaged
24.74 cents versus 23.08 in fiscal 1993.  Corn gluten feed averaged $89.28 per
short ton in fiscal 1994, down 4.4 percent from the previous year.  First
quarter fiscal 1995 prices averaged $86.80 versus $85.57 the year before. 
Corn gluten meal prices averaged $280.78 per ton in fiscal 1994, down 2.3
percent from fiscal 1995.  October-December 1994 prices averaged $232.93
versus $306.07 for the corresponding quarter a year ago.

After deducting for byproduct credits--corn oil, and corn gluten feed and
meal--the net corn cost to Midwest refiners averaged $1.14 per bushel for
fiscal 1994, up from 80 cents in fiscal 1993.  For the first quarter of fiscal
1995, the net corn cost was 77 cents per bushel versus $1.23 for October-
December 1993.

The net corn sweetener cost to Midwest corn refiners averaged 3.44 cents per
pound, dry basis, in fiscal 1994, compared with 2.39 cents for fiscal 1993. 
October-December 1994 net corn sweetener costs averaged 2.30 cents per pound
versus 3.69 cents for first-quarter fiscal 1993.

Special Article

U.S. Sugar Market:  Recent Trends, Current Situation, and Outlook to the Year
2000 1/

by
Peter Buzzanell and Ron Lord

Abstract:  Projections for U.S. sugar market variables are made to the year
2000 as part of USDA's baseline process.  Assumptions underlying the
projections include continuation of current agricultural law, and normal
weather.  U.S. sugar consumption is projected to continue growing at about 1.5
percent a year.  The overall sugar production growth rate, once back on trend
in 1995/96, is projected at 1.3 percent a year.  The cane sugar production
growth rate is slightly negative, -0.1 percent a year, while beet sugar
production grows at a 2.4 percent annual rate.  U.S. sugar imports are
projected at 1.25 million short tons in fiscal 1996, and are expected to rise
slowly thereafter.  While domestic sugar marketing allotments are shown as
triggered only in fiscal 1996, normal variations in production and consumption
after 1996 would likely result in allotments also being triggered in other
years.

Key Words:  Sugar, production, consumption, trade.

Introduction

The U.S. sugar market continues to be dynamic in size and structure.  U.S.
sugar is an important part not only of the U.S. agricultural sector, but also
of the global sugar economy in terms of production, consumption, and trade. 
Like most countries, there is considerable Government intervention in the U.S.
sugar market--a loan program, tariff-rate import quota, and provisions for
marketing allotments--which affects domestic prices as well as U.S. producers
and consumers and foreign exporters.

1/ Peter Buzzanell is Tema Leader, Sweeteners Analysis, Commercial Agriculture
Division, Economic Research Service, USDA.  Ron Lord is Senior Area
Specialist, Specialty Crops, in CAD/ERS.

U.S. sugar production (including Puerto Rico) for fiscal year 1995 is forecast
at a record 8.24 million short tons, raw value.  Only the expected output in
the combined European Union (EU) countries, India, and Brazil are forecast
higher.  Moreover, U.S. sugar production with major components of sugarbeet
and sugarcane outrank the only other major dual producer, China, by 40
percent.

U.S. sugar consumption ranks third in the world behind India and the EU.  The
U.S. has the world's third largest population of 263 million and the largest
and most diverse food processing industry.  Despite a trend toward greater
self-sufficiency in production, the United States remains one of the world's
largest net sugar importers--only the Russian Federation and Japan are higher. 
In addition, U.S. stocks form a significant share of global stocks, 7 percent
at the beginning of 1994/95, with only the EU and India higher, and comparable
to Russia's.

This large and diverse industry is also very dynamic in its composition.  To
assess where the industry is headed, the authors trace recent trends, examine
the current situation for fiscal 1995, and project to the year 2000. 
Underpinning this analysis is USDA's current and historical sugar data base,
updated and critiqued regularly by the various agencies of the Department. 
The projections are developed through USDA's Interagency Baseline Process (see
page 15).

Beet Sugar Production

Recent Trends

Beet sugar production has expanded from around 3.0 million tons annually in
the early 1980's to an average 4.1 million in the early 1990's, up by one-
third.  The beet sugar production growth trend is 137,000 tons per year over
fiscal 1983-1994 (figure A-1). 2/  Sugarbeet harvested acreage has expanded by
over 200,000 acres from 1.2 million in the early 1980's to 1.4 million in the
early 1990's.  While some areas have experienced a decline, notably
California, this has been more than offset by expansion in the Upper Midwest.

2/  Note that fiscal 1995's record crop is not included in the base used to
establish the trend.

To accommodate the expanded area, U.S. beet processing firms have increased
slicing capacity (tons of beets per day) to an average of 5,374 tons per
factory, up by one-third from the early 1980's.  In contrast to higher acreage
and capacity, sugarbeet yields have not trended upward, but vary widely from
year to year due to weather.  However, sugar per acre has been rising,
reflecting the growing of beet seeds bred for high sugar content, improved
management techniques by farmers, and improved processing technology. 
Processors have provided incentives to growers to raise crop quality (sugar
versus tonnage).  The improved management of nitrogen has been pivotal to this
effort.  Too much nitrogen costs growers twice--extra cost for unneeded
inputs, and lower extractable sucrose which, reduces crop returns.

Current Situation

Beet sugar production for fiscal 1995 is forecast at a record 4.65 million
tons, up 14 percent or 560,000 tons from last year (table A-1). 3/  Sugarbeet
production is estimated at a record 32.0 million tons, with national yields
and acreage harvested estimated at 22.2 tons per acre and 1.44 million acres,
respectively.  The improved outturn largely reflects higher production in
Minnesota and North Dakota with sugarbeet production estimated at 12.74
million tons, 40 percent of the national crop, and up 51 percent from last
year.  Beet sugar production from the desugaring of molasses (included in the
total forecast) is expected to total 235,000 tons from six facilities now in
operation, compared with under 50,000 tons from one facility just 5 years ago.
4/

3/ Current estimates are based on the February 11, 1995 World Agricultural
Supply and Demand Estimates (WASDE) report.  The sugar estimates and analysis
contained in this report are developed by USDA's Interagency Sugar Estimates
Committee.
4/  Desugaring molasses raises total sugar recovery from sugarbeets by about
10 percent.

Early indications are that sugarbeet acreage planted this spring for the
1995/96 crop will be fairly steady with 1994/95.  While some areas are
expected to expand somewhat, such as California, most other areas are expected
to remain unchanged or perhaps decline slightly, reflecting the prospects of
stock carryover due to marketing allotments and capacity constraints at
factories.  In Texas, sugarbeet acreage will remain depressed because high
cotton prices are likely to encourage farmers to plant more cotton.  USDA's
survey-based estimate of 1995/96 planting intentions will be released March
31, 1995.

Outlook To 2000

Sugarbeets, while more expensive to grow, are generally more profitable than
alternative crops in most areas where they are grown, and under the current
sugar program are expected to remain more profitable.  Sugarbeet acreage
harvested is projected to rise from 1.45 million acres in 1995 to 1.55 million
in 2000, up about 20,600 acres per year.  Sugarbeet yields are projected
stable, while the beet sugar recovery rate will rise gradually on trend (table
A-2).

According to USDA's most recent baseline projection, total beet sugar
production rises about 90,000 tons a year, reaching 5.02 million tons in 2000
(figure A-2).  This compares with production of 3.47 million tons in 1990 and
3.23 million in 1980.  Projected sugar from the desugaring of beet molasses
rises to 350,000 tons by 1997, an amount equivalent to 120,000 acres of
sugarbeets.

The beet sugar industry would expand even more rapidly, but investment is
likely to be constrained somewhat by the risk of marketing allotments.  Under
USDA assumptions, beet sugar's share of total domestic sugar production
continues to grow from 52 percent in 1990, to 56 percent in 1995, and 60
percent in 2000.  However, this assessment might understate potential
expansion in light of emerging news of investment programs by beet processors,
such as the US$63 million expansion program recently announced by a farmer
owned cooperative in the Upper Midwest that will boost its factory slicing
capacity 27 percent and acreage 37 percent by the late 1990's.

Cane Sugar Production

Recent Trends

Cane sugar production grew at a trend rate of 32,000 tons per year during
fiscal 1983-1994 (figure A-3).  Over this period national acreage has expanded
by 200,000 acres, led by Florida and Louisiana.  In contrast, Hawaiian and
Puerto Rican acreage has declined.

Florida has displayed strong production growth, underpinned by expanded area
and generally improved yields and recovery rates.  Production rose from 1.2
million tons in the early 1980's to 1.8 million in the early 1990's. 
Louisiana has experienced freezes, hurricanes, and periodic poor growing and
harvesting weather, but acreage has been trending up.  Texas has made
incremental improvements in its field and factory efficiency and also has had
production at record levels in recent years.

Hawaii's annual production has fallen from 1.0 million tons as recently as
1987 to 660,000 tons last year, down by one-third.  The contraction in
production and acres harvested is attributed to the closure of mills due to
high costs and poorer yields.  Puerto Rico's sugar production has declined
from over 1 million tons in the 1950's to less than 50,000 tons this season. 
The government-owned industry is no longer cost-competitive.

Current Situation

Cane sugar production for fiscal 1995 is forecast at 3.59 million tons,
marginally above last year.  Louisiana's production is a record 1.02 million
tons (the grinding season in Louisiana ended January 2).  Louisiana's sugar
industry has rebounded sharply from the severe freeze which cut 1990/91 output
to 480,000 tons, less than one-half of this season's record.  The dramatic
upturn in fiscal 1995 is attributed to improved yields and near-record acreage
harvested for sugar.

In sharp contrast, the production forecast for Hawaii is 540,000 tons, down 23
percent from the estimate for fiscal 1994.  The downturn is explained by the
permanent closing of three mills due to high costs, and the shift of acreage
servicing the mills out of sugarcane.  Florida, the nation's largest cane
sugar producing state, is expected to produce 1.84 million tons, 51 percent of
the U.S. cane sugar forecast.  Heavy rains the last few months have slowed
grinding, but yields are not expected to be affected.  Florida's cane grinding
season runs into April.

Outlook To 2000

Sugarcane acreage is projected to decline slightly from 1995 to 2000. 
National average cane yields, which have been falling due to loss of high-
yielding Hawaiian acreage, may increase slowly as research and development of
better varieties proceeds and Hawaii's acreage stabilizes.  The cane sugar
recovery rate should rise on trend.  For Texas, Louisiana, and Florida, cane
sugar production is expected to remain stable or grow slowly with production
projected at 140,000 tons, 930,000 tons, and 1.79 million tons, respectively. 
Hawaii's sugar production is expected to decline to 430,000 tons (figure A-4). 
Puerto Rico's production is expected to continue its  contraction, dipping to
30,000 tons by 2000.

Cane sugar faces less risk from the current program's marketing allotments
than beet sugar, since even if triggered (using current formula), the
marketing allotment for cane sugar is more likely to exceed actual production. 
Cane sugar production is expected to total 3.33 million tons in 2000, 40
percent of domestic production (figure A-5).  This compares with 3.12 million
in fiscal 1990 and 2.88 million in 1980 (includes 153,000 tons in Puerto
Rico).

Sugar Consumption

Recent Trends

During the first half of the 1980's, sugar lost 2 million tons of the beverage
market to lower-cost high fructose corn syrup (HFCS).  Since 1986/87, with
maturity of the HFCS market, sugar use has rebounded by 1.8 million tons
(annually averaging 2.0 percent growth or 169,000 tons per year).  This
resurgence largely reflects population growth (0.9% per annum), increases in
immigrant population (many of whose traditional diets are high in sugar),
expansion of away-from-home food consumption, and increases in use by food
processors (especially the baking/cereal and confectionery sectors--up 37 and
26 percent, respectively, 1986-1994) (figures A-6 and A-7).

Beet sugar deliveries have grown by over 700,000 tons from 1986/87 through
1993/94, capturing a 46-percent share of total sugar use in the early 1990's,
compared with 33 percent in the early 1980's. 5/

5/ USDA uses sugar deliveries from manufacturers to first users as a surrogate
for actual consumption data.  Data are raw value, unless otherwise specified.

Current Situation

U.S. sugar consumption in fiscal 1995 is forecast at 9.43 million tons,
compared with 9.33 million last year.  The year-to-year growth is up 1.0
percent or 97,000 tons.  Underpinning this anticipated growth is expected
strong demand for sugar from the bakery and cereal industries.  For calendar
1994, deliveries to this use category totaled an estimated 1.96 million tons,
refined, up 10.1 percent from the year before, and 40 percent of total
industrial use.

The anticipated increase also reflects projected income and population growth. 
Per capita sugar deliveries for food and beverage use are forecast at 64.9
pounds, refined basis, for fiscal 1995, down fractionally from 1994, but
trending up since 1986. 6/  The rapid substitution of corn sweeteners for
sugar ended about 1986, after which per capita sugar use has been on the rise,
though the rate of increase has slowed since fiscal 1991.

6/ This analysis is based on an estimate of the U.S. population (including
Puerto Rico) of 267.3 million for fiscal 1995.  U.S. population is projected
at 275.6 million for the year 2000.

Outlook To 2000

The projected growth rate of sugar consumption (1995 through 2000) is about
1.5 percent a year, down from the recent 2 percent average, due to constraints
on the ability of sugar to continue to displace other foods.  An industry
sugar promotion campaign, which promoted its "naturalness," has ended for the
moment, but sugar continues to benefit from increased public emphasis on the
negative nutritional aspects of fats.

Per capita sugar consumption for food and beverage use is forecast to rise to
67.1 pounds, refined basis, in 2000.  Domestic sugar disappearance is expected
to rise about 150,000 tons per year from 1995 to 2000 (down from 169,000 in
recent years) due to population and per capita use growth.  Total sugar use is
likely to reach 10.19 million tons in 2000, up from 8.90 million in fiscal
1990 and above the 9.95 million achieved in 1980 (figure A-8).

Sugar Trade

Recent Trends

The U.S. remains one of the world's largest sugar importers, but imports for
consumption have generally contracted as the gap between total domestic
consumption and production has narrowed (figure A-9).  During the 1980's,
quota sugar imports dipped from 3.0 million tons to a low of 874,000 tons in
fiscal 1988.  The Food, Agriculture, Conservation and Trade Act of 1990 has
had the effect of putting a floor on the quota of 1.25 million tons.

USDA's sugar reexport programs has allowed refiners and manufacturers access
to world-priced sugar for refining and reexport in the form of refined sugar
and sugar containing products.  Quota-exempt imports for reexport averaged
489,000 tons annually between fiscal 1983 and 1994 and ranged between 550,000
and 650,000 tons the last 5 years.  U.S. exports of refined sugar, largely
from quota-exempt imports, have ranged between 189,000 and 627,000 tons
depending on foreign demand and pricing levels (1983-94).  The transfers of
refined sugar to manufacturers of sugar-containing products for export is a
small, but rapidly growing outlet-- forecast at 160,000 tons for fiscal 1995
compared with an average of 94,000 tons the previous 5 years.

Current Situation

For fiscal 1995, the United States is forecast to remain a large net sugar
importer, with imports expected to be over three times as large as exports. 
Total imports for fiscal 1995 are forecast at 1.86 million tons, compared with
exports of 510,000 tons.  Estimated total imports for fiscal 1995 consist of
1.39 million tons of tariff-rate quota (TRQ) imports, 400,000 tons of quota-
exempt raw sugar for processing and reexport, 50,000 tons of beet sugar from
Canada and under the high tariff, and 15,000 tons of quota-exempt imports for
polyhydric alcohol. Forecast imports under the TRQ for fiscal 1995 assume a
shortfall of 120,000 tons.  Also several large quota holders have deferred
shipping to the U.S. quota market and have focused their exports to the world
market while world prices remain high (figure A-10).

The current import quota system allows entry at the rate of 0.625 cents per
pound, raw value basis.  The duty is waived for sugar from beneficiary
countries including Caribbean Basin Initiative (CBI), Andean Preference, and
most Generalized System of Preferences (GSP) countries except Brazil.  Within-
quota duties paid may be eligible for U.S. Customs drawback, if sugar is
reexported.  Any non-quota raw sugar entering the United States for
consumption is subject to a duty of 17.62 cents per pound.

Outlook To 2000

The gap between domestic sugar consumption and production is projected to
widen over the next 5 years.  As a result, if the TRQ is managed as in the
past, imports for consumption are forecast at 1.25 million tons for 1996, then
at 1.66 million for 1997 and 1998, and at 1.72 million in 2000 (figure A-11). 
Quota-exempt imports are expected to remain at 600,000 tons with reexports of
refined sugar and sugar in sugar-containing products mirroring the level of
imports.

The North American Free Trade Agreement (NAFTA), implemented on January 1,
1994, does not affect the trade forecast through 2000 but could affect the
U.S. market after the year 2008, when all barriers to sugar trade between the
United States and Mexico are ended.  The implementation of the new Uruguay
Round General Agreement on Tariffs and Trade (GATT) will not change the basic
features of U.S. sugar imports or exports.  The two-tiered TRQ system will
remain in place, and the low duty applicable to in-quota imports will be
unchanged.  The second-tier duty of 16 cents a pound, raw value, is changed to
a base value of 18.08 cents a pound, to be phased down to 15.36 cents in 2000. 
For 1995, the second-tier duty is 17.62 cents a pound.  The import fee on
refined sugar of 1 cent per pound (whether in-quota or not) has been
incorporated in tariff rates for all TRQ imports other than raw sugar.

Also under the Uruguay Round, the United States bound the import quota (low-
duty) of 1.256 million short tons, raw value, annually, comprised of 24,000
tons of refined sugar, raw value, and 1.232 million tons of raw sugar.  For
the period January 1, 1995 to September 30, 1995, Canada has a quota of 8,000
metric tons, raw value, to be entered as refined sugars which are originating
goods of Canada.  This quota has already been filled.  Mexican and Canadian
sugar imports will be counted as part of the TRQ in fiscal 1996.  Canada's
share of the quota after October 1, 1995 has not been announced.

Sugar Prices and Stocks

Recent Trends

Grower prices for sugarcane derive from the raw sugar price, which has been
based on a cane sugar loan rate of 18 cents a pound, raw value, during the 
life of the 1985 and 1990 Farm Acts.  Since fiscal 1983, monthly average U.S.
raw sugar prices (New York Contract No. 14) have ranged from a high of 23.29
cents in fiscal 1990 to a low of 20.46 cents in 1986, a spread of 2.83 cents. 
In contrast, during this 11-year period, annual average world raw sugar prices
ranged from a high of 13.67 cents in 1990 to a low of 3.76 cents in 1985, a
spread of 9.91 cents.

USDA's sugar price "model" utilizes stocks-to-use estimates in order to
forecast price (i.e. for every percent change in the stocks-to-use ratio there
is a 0.36-cent change in raw sugar price).  The model has worked reasonably
well in forecasting third-quarter raw sugar prices, though less reliably in
recent years.

Grower prices for sugarbeets are typically based upon the net return from
processors' sales of sugar.  Contracts specify that processors may deduct from
gross returns certain expenses, such as shipping and handling, marketing,
storage, taxes, insurance, and freight to calculate the net return.

Current Situation

The raw sugar price averaged 22.05 cents a pound in fiscal 1994 versus 21.49
the year before.  Prices averaged 21.83 cents for the first quarter of fiscal
1995 (October-December), 22.65 for January 22.69 for February, and 22.56 cents
for the first 10 days of March.  Wholesale refined beet sugar prices (f.o.b.
plant, Midwest markets) averaged 25.60 cents for fiscal 1994 and 25.00 cents
October-December 1994.  Wholesale prices for January and February averaged
25.50 cents per pound and have remained at that level through the first 10
days of March.

The ending stocks-to-use ratio for fiscal 1994 was 13.6 percent.  The fiscal
1995 stocks-to-use ratio, based on USDA's March 10, 1995 WASDE release, is
forecast at 15.2 percent.  Ending stocks on September 30 are forecast at 1.49
million tons.  This includes approximately 258,000 tons of beet sugar and
53,000 tons of cane sugar in excess of marketing allotments.  The stocks-to-
use ratio without the "blocked stocks" would be 11.9 percent.

Stepped-up U.S. exports under the reexport program, expectations for increased
U.S. sugar deliveries during the second half of the year, a slowdown in U.S.
sugar imports, and restrictions on domestic sugar marketings, have bolstered
raw sugar futures prices somewhat in the past several weeks.

Outlook To 2000

>From 1995 through 2000, the stocks-to-use ratio is forecast at 13.5 percent,
and the raw sugar price at 22.10 cents a pound, a price consistent with the
implementation of the sugar program in recent years. 7/

7/ Under the baseline, prices are nominal, not constant-dollar, values.

The raw cane sugar loan rate, assuming no change in the U.S. sugar program,
remains at 18 cents a pound, raw value, to 2000.  The 1994/95 beet sugar loan
rate was recently announced at 23.43 cents a pound, refined basis, and is
projected at 23.42 cents after 1996.

Legislation provides for domestic marketing allotments to be imposed if
estimated imports fall below 1.25 million short tons, raw value.  Domestic
marketing allotments were imposed for fiscal 1993 at the beginning of the
fourth quarter of fiscal 1993, and for fiscal 1995.  Allotments are projected
in the baseline for fiscal 1996, but not subsequently.  However, normal
variations of production and consumption would likely result in import needs
dropping below the 1.25 million-ton trigger level sometime in the forecast
period.

Conclusions

Recent Trends and Current Situation

Improvements in production technologies combined with economic incentives to
expand has led to substantial growth in U.S. sugar production, especially for
beet sugar.  This growth has generally outpaced the expansion in consumption. 
Reflecting this trend, coupled with the guidelines of the 1985 and 1990 farm
bill to administer a no-cost sugar policy, USDA has been required to either
cut the tariff-rate quota and/or impose marketing allotments.  With the quota
floor of 1.25 million tons implied by the 1990 Farm Act, USDA can no longer
make drastic quota cuts in record production years--e.g. a quota of 874,000
tons in fiscal 1988.  When the sugar supply-demand shortfall hits 1.25 million
tons, USDA must accomplish the no-cost goal (e.g. no forfeitures of sugar
under loan to USDA) through marketing allotments.

For fiscal 1995, record production has again outpaced consumption growth. 
With quota imports at the floor level of 1.25 million tons, USDA imposed
marketing allotments October 1, 1994, using the three factor weights of 25
percent (past marketings), 25 percent (processing capacity), and 50 percent
(ability to market).

Each quarter the USDA is required to reassess the need for marketing
allotments.  This was done in late December, when the overall allotment level
of 7.89 million tons (4.36 million for beet sugar and 3.53 for cane sugar) was
left unchanged.  Another quarterly assessment will be done in March.  Since
October 1, USDA estimates for sugar production (including Puerto Rico) are up
350,000 tons, reflecting the record outturn expected in fiscal 1995,
consumption estimates are down 50,000 tons, imports of quota sugar are higher,
and non-quota imports for reexport are lower.  With marketing allotments set
at 7.89 million tons, production in excess of marketing allotments,
approximately 310,000 tons, are "blocked" from being marketed domestically. 
This action, along with a sharp upturn in the world price, has caused the U.S.
sugar market to move to price levels that, if sustained, would avoid
forfeitures of sugar loans to USDA.

Meanwhile, world sugar supplies are tight and world prices have risen to
levels closer to those in the United States.  This changing world market
situation has had two effects on the U.S. sugar market.  First, some foreign
exporters are opting to delay export to the United States, especially those
quota holders which are net sugar importers.  Second, U.S. refiners are
exporting domestic sugar under the reexport program and deferring the import
of raw sugar to 1996, due to spreads between nearby and distant futures
prices.  This is reducing the availability of sugar for the domestic market. 
These events, along with the sugar blocked  off the market by marketing
allotments, are combining to strengthen domestic cane sugar prices.  Some
segments of the sugar industry are currently urging the USDA to lift marketing
allotments and/or increase the size of the import quota in order to increase
domestic supplies and dampen prices.

Outlook To 2000

Again, assuming no change in the U.S. sugar program, USDA projects sugar
production in 2000 at 8.35 million tons, up 7.2 percent or 60,000 tons from
fiscal 1995 as growth in beet sugar production, up 320,000 tons to 5.02
million, is largely offset by a decline of 260,000 tons in cane sugar to 3.33
million.  The growth in beet sugar is largely attributed to expanded acreage,
especially in the Upper Midwest, while contraction in cane sugar output is
explained by sharply lower production forecast for Hawaii--despite some new
investments and new acreage now expected on the island of Maui--and somewhat
lower production in Florida and Puerto Rico.  These estimates are USDA's best
judgments, given the interaction of variables in our model and overlaid by
current intelligence about emerging trends in technology and investments in
production capacity.  It should be noted that in the past we significantly
underestimated the growth in beet sugar output and the decline in Hawaii--we
could be wrong again.  USDA's 1990 forecast of 1995 production (including
Puerto Rico) was 7.6 million tons, compared with current estimates of 8.2
million.

On sugar consumption, USDA foresees expansion from 9.43 million tons in fiscal
1995 to 10.19 million in 2000, up 8.1 percent or 760,000, accomplished by
year-to-year growth of about 1.5 percent (figure A-12).  USDA has been doing
much better with annual consumption forecasts with the availability of monthly
data--but our long-run forecasts also have generally underestimated
consumption growth (e.g. USDA's 1990 forecast of 1995 consumption, including
Puerto Rico, was 8.8 million tons versus the current estimate of 9.4 million). 
This time USDA could be too bullish on growth, especially in light of new
technologies for substitutes for sucrose or the increased blending of sucrose
with other sweeteners--all encouraged by price differentials.

Given USDA forecasts for consumption and production, USDA envisions imports
for consumption in 2000 at 1.72 million tons, well above the 1.25-million-ton
threshold that might trigger marketing allotments.  In fact, over the next 5
years USDA foresees imports at the threshold level only in fiscal 1996.  If
USDA significantly underestimates production and/or overestimates consumption,
new scenarios would have to be developed.

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