SUGAR AND SWEETENERS -- SUMMARY                           September 18, 1997
September 1997, SSS-221
               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 will be available 1-2 weeks following this summary release.
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Raw Cane Sugar TRQ for Fiscal Year 1998 Set at 1.8 Million Metric Tons

The raw cane sugar tariff-rate quota (TRQ) for 1997/98 was set on September 17,
1997, at 1.8 million metric tons, raw value. The refined sugar TRQ was set at
50,000 metric tons, raw value, with 25,000 tons allocated to Mexico under North
American Free Trade Agreement (NAFTA) provisions. The raw cane sugar TRQ will be
administered similarly to last year. Under administration of the TRQ, 1.2
million tons have been allocated. If the stocks-to-use ratio reported in the
January 1998 World Agricultural Supply and Demand Estimates (WASDE) report is
less than or equal to 15.5 percent, an additional 200,000 metric tons will be
available for entry at that time. If the ratio is greater than 15.5 percent, the
200,000 tons being held in reserve will not be made available. The same process
will occur with the March and May WASDE reports.  
 
U.S. sugar production in 1997/98 (October 1997-September 1998), is projected at
7.635 million short tons, raw value, up 5.3 percent from 1996/97. Beet sugar
production is forecast at 4.3 million tons, up 250,000 tons. Cane sugar is up
130,000 tons to 3.34 million tons. Sugar production for 1996/97 is estimated at
7.25 million tons, 4.05 million tons of beet sugar and 3.2 million tons of cane
sugar. 

Sugarbeet area harvested for 1997/98 is up 8 percent from last year when acreage
was depressed by bad weather and the relatively high prices of alternative
crops. Increased sugarbeet acreage is spread throughout nearly all growing
areas.

Louisiana is projected to have the largest increase in cane sugar in 1997/98, up
10 percent to 1.15 million short tons because of larger acreage and excellent
yields. Florida is projected to produce 1.73 million tons, 3 percent above last
year's disappointing crop but about average. Hawaii's production is forecast to
decline slightly to 340,000 tons, indicating at least a temporary lull in a 10-
year decline from 1 million tons. 
 
Total U.S. sugar deliveries for 1997/98 are forecast at 9.9 million tons, up 1.5
percent, or 150,000 tons, from 1997's revised estimate. This growth rate is
comparable with the 5-year trend. The U.S. Department of Agriculture's (USDA)
forecast of 1996/97 sugar consumption is 9.75 million short tons, raw value,
based on analysis of 10 months of USDA delivery data.

The United States and Canada reached an agreement on September 8, 1997, in which
Canada will not challenge the use of the U.S. sugar-containing products re-export
program. The United States has agreed to allocate to Canada its historical share
of refined sugar and sugar-containing products in two TRQs. 

Beginning stocks in 1997/98 are forecast at 1.55 million tons, up 62,000 tons
from beginning stocks of 1.49 million tons for 1996/97. Beet sugar processors
have been holding significantly more stocks than last year. Wholesale refined
beet sugar prices (f.o.b. plant, Midwest markets) have recently declined to
26.50 cents a pound from levels of around 29 cents a pound earlier in the year.
The prospective increase in sugarbeet acreage and the corresponding 400,000-ton
rise in the forecast beet sugar crop is responsible for much of the softening in
refined prices. 

U.S. raw sugar prices (nearby futures, c.i.f., duty-paid, Contract No. 14, New
York) averaged 22.22 cents a pound in the first 11 market days of September,
compared with 22.21 in August and 22.04 in July. In the 2 days following the TRQ
announcement on September 17, raw sugar prices strengthened.

Use of the Commodity Credit Corporation's (CCC) loan program by sugar processors
has dropped from earlier years. In the 1996 crop year, 577,000 tons of refined
beet sugar and 335,000 tons of cane sugar was placed under loan. 

USDA has released estimates of the 1996 cost of production for sugar crops. The
U.S. national average cash costs of production fell 4 percent for sugarbeets and
1 percent for sugarcane. 

The proposed merger between Imperial Holly and Savannah Foods, and Industries,
Inc. is expected to be completed before the end of the year. Analysis of the
sugar market indicates that the share of the sugar market held by the top four
firms could rise to 83 percent in 1998, up from 74 percent in 1997.
 
High fructose corn syrup (HFCS) production in calendar year 1997 is projected at
8.5 million short tons, dry basis, up from 8.2 million tons in 1996. Expansion
of production capacity in recent years has resulted in the capacity-utilization
rate declining to near 70 percent in 1997. HFCS prices continue soft.

Mexico has imposed provisional duties on U.S. HFCS. The U.S. Trade
Representative's office has asked Mexico for consultations on the duties under
the World Trade Organization dispute settlement process. 

This issue addresses three special topics. "Origin of the U. S. Sugar Tariff-Rate
Import Quota Shares," "The HFCS Trade Dispute with Mexico," and "Changes in
the Structure of the Sugar Industry." Printed copies of the Sugar and Sweetener
Situation and Outlook will be available in about 2 weeks. For more information
contact Ron Lord (202) 219-0888.

Contact the ERS Information Center for further information about ERS products
and services:  (202) 219-0515.

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