Sugar and Sweeteners Outlook

Transcription

1 United States Department of Agriculture Electronic Outlook Report from the SSS-M-267 Nov. 15, 2010 Sugar and Sweeteners Outlook Stephen Haley, coordinator Mike McConnell U.S. Sugar November 2010 Contents Summary Mexico Sugar and High Fructose Corn Syrup U.S. Sugar Effects of Global Sugar Markets on U.S. Ethanol Contacts and Links Websites WASDE Sugar Briefing Room The next release is December 14, Approved by the World Agricultural Outlook Board. The U.S. sugar supply and use balance for fiscal year (FY) 2010 published in the November 2010 World Agricultural Supply and Demand Estimates (WASDE) reflects final estimates of stocks, production, and use published in the Sweetener Market Data (SMD) and the latest data from the Foreign Agricultural Service. Total production is up 22,455 short tons, raw value (STRV) from last month to million STRV. Beet sugar production finished at million STRV for the year, up 50,215 STRV from last month. September production was particularly strong at 446,700 STRV. Cane production finished at million STRV. September production was a bit less than expected last month in Louisiana 19,000 STRV for a year total of million STRV and Hawaii 8,763 STRV for a year total of 161,237 STRV. FY 2010 imports are estimated at million STRV, up 75,000 STRV from last month. The increase resulted from strong Mexican imports in both August and September. Imports from Mexico finished the fiscal year at 807,000 STRV. Final estimates from SMD put deliveries for human consumption at million STRV, other deliveries at 236,000 STRV, exports at 211,000 STRV, and miscellaneous uses at- 22,000 STRV. In all, total use increased 201,000 STRV from last month. Ending-year stocks finished at million STRV, for an ending-year stocks-to-use ratio of 13.3 percent.

2 Projected U.S. sugar supply for FY 2011 is increased 218,000 STRV from last month due to higher imports more than offsetting lower beginning stocks and production. Sugar production is lowered 155,000 STRV, based on lower forecast production of U.S. sugar beets and Louisiana sugarcane. Beet sugar production is projected at million STRV, down from million STRV in October. Louisiana cane sugar production is projected at million STRV, down from million STRV forecast in October. Imports from Mexico are increased 475,000 STRV to million STRV, based on greater supplies and lower sugar use in Mexico. Total FY 2011 U.S. use is unchanged. FY 2011 ending stocks are projected at million STRV, implying an ending-year stocks-to-use ratio of 11.3 percent. The November 2010 WASDE included changes to Mexico s 2009/10 sweetener supply and use, based on an examination of estimates made by the Comite Nacional Para el Desarrollo Sustentable de la Cana de Azucar (CNDSCA) in Mexico. The U.S. Department of Agriculture (USDA) adopted CNDSCA estimates of deliveries for human consumption and stocks. Deliveries for human consumption are estimated at million metric tons, raw value (MTRV), a decrease of 197,000 MTRV from last month s WASDE, and stocks are estimated at 973,000 MTRV, an increase of 196,000 MTRV from last month s WASDE. The USDA used other CNDSCA estimates to revise its own estimates of imports, exports, and deliveries to Mexico s sugar-containing product re-export program, Industria Manufacturera Maquiladora y de Servicos de Exportacion (IMMEX). Combined per capita consumption of sugar and high fructose corn syrup (HFCS) consumption in Mexico in 2010/11 is projected to remain at about the same level as in 2009/ kilograms. However, consumption of HFCS is expected to continue its market growth up to million metric tons, dry basis, from million metric tons in 2009/10. This growth in HFCS reduces sugar consumption by about 4 percent, or 178,000 MTRV, to million MTRV. Exports, most of which are destined for the U.S. market, are projected at 938,000 MTRV for 2010/11, an increase of over 25 percent from exports of 737,000 MTRV in 2009/10. 2

3 Mexican Sugar and High Fructose Corn Syrup The U.S. Department of Agriculture (USDA) has revised 2009/10 estimates of Mexico s sweetener supply and use based on examination of estimates made by the Comite Nacional Para el Desarrollo Sustentable de la Cana de Azucar (CNDSCA) in Mexico. The USDA adopted CNDSCA estimates for deliveries for human consumption and stocks. The USDA used other CNDSCA estimates to revise its own estimates of imports, exports, and deliveries to Mexico s sugar-containing product re-export program, IMMEX. The CNDSCA collected and published monthly 2009/10 delivery data for sugar (estandar, refinado, and total) and for high fructose corn syrup (HFCS). Table 1 shows CNDSCA estimates of total sugar and HFCS for the 12 months of 2009/10. Total sugar deliveries reached an estimated million metric tons, actual weight, or million metric tons, raw value (MTRV), about a 9-percent decrease in total sugar deliveries from those of 2008/09 (table 4). HFCS deliveries were estimated at million metric tons, dry weight basis, an increase of 117 percent from those of 2008/09. Combined per capita sweetener consumption was estimated at 51.3 kilograms, about 5 percent more than in 2008/09. HFCS deliveries increased steadily throughout the October/September marketing year. Average deliveries for the first 4 months were 92,630 metric tons, or about 20 percent of combined sugar and HFCS deliveries. The average was 124,500 metric tons for the next 4 months, or 24 percent of combined deliveries. The average for the final 4 months was 137,300 metric tons, or 30 percent of the combined total. For the entire marketing year, HFCS constituted about 24.6 percent of combined sweetener consumption. The CNDSCA estimates imports for consumption at 610,164 metric tons, or 646,774 MTRV, which includes 10,521 metric tons, or 11,152 MTRV, of imports from the United States. In contrast to the USDA procedure, the CNDSCA does not include in its estimate imports for Mexico s sugar-containing re-export program, IMMEX. Foreign trade data from the U.S. Census Bureau shows U.S. sugar exports through August (11 months) at 209,665 MTRV. Adding in a projected 16,050 MTRV for September implies total exports of 225,715 MTRV. Considering that Mexico reports imports for consumption at 11,152 MTRV, sugar imported from the United States for IMMEX would be 214,563 MTRV. This amount added to CNDSCA imports for consumption (646,774 MTRV) implies total 2009/10 imports at 861,337 MTRV, which is the USDA estimate in the World Agricultural Supply and Demand Estimates (WASDE). The USDA estimates exports of sugar from Mexico at 737,165 MTRV. This estimate is derived from adding total U.S. sugar imports from Mexico of 732,165 MTRV and a CNDSCA estimate of Mexican exports to other countries of 5,000 MTRV. 1 1 The CNDSCA reports exports at 751,474 metric tons, or 796,562 MTRV, which includes deliveries of domestic production to IMMEX of 87,346 MTRV. Unlike the USDA practice, Mexico treats these IMMEX deliveries as exports. Subtracting these IMMEX deliveries from the total implies exports of 709,216 MTRV. This amount, however, is below reported U.S. sugar imports from Mexico of 732,165 MTRV. 3

4 Table 1--Sugar and high fructose corn syrup (HFCS) deliveries in Mexico in 2009/10 HFCS as Months 2009/10 Sugar HFCS Total sweetener percent of total Metric tons, tel quel Metric tons, dry eqivalent Percent Oct. 377,628 94, , Nov. 342,194 94, , Dec. 391,784 94, , Jan ,648 88, , Feb. 377, , , Mar. 352, , , Apr. 429, , , May 413, , , June 398, , , July 372, , , Aug. 317, , , Sept. 215, , , Total 4,353,564 1,417,710 5,771, Source: Comite Nacional Para el Desarrollo Sustentable de la Cana de Azucar (CNDSCA). The CNDSCA estimates deliveries to IMMEX from domestic production at 82,402 metric tons, or 87,346 MTRV. Added to imports to IMMEX of 214,563 MTRV implies an IMMEX total of 301,908 MTRV, representing a reduction of almost 100,000 MTRV projected for IMMEX deliveries in the October 2010 WASDE. Ending stocks are estimated at 918,099 metric tons, or 937,185 MTRV. In order to balance total supply of 6.6 million MTRV with estimated use of million MTRV, a statistical adjustment of about -27,000 MTRV is included in the Mexican supply and use balance. 2 Projections for 2010/11 Considerable uncertainty remains regarding Mexican sugar production in 2010/11. Recent projections from sugarcane growers and processors are in the million MTRV range. One well-known web-based sugar-reporting service has put production as low as million MTRV. The CNDSCA, on the other hand, has in its first 2010/11 estimate put production at million MTRV. 3 Within these bounds is the USDA projection of million MTRV, unchanged since the May 2010 WASDE. Imports are forecast at 225,000 MTRV. More than half of these imports are expected from the United States, most of which are expected to be used in Mexico s IMMEX program. The remainder comes from other countries and is expected to augment domestic food and beverage consumption. On October 7, 2010, the Secretariat of Economy (SE) published two announcements in the Diario Oficial (Federal Register), for a combined import tariff rate-quota (TRQ) of 100,000 metric tons of sugar. The first announcement was 2 This amount is basically the difference between CNDSCA and USDA estimates of exports. 3 The CNDSCA projection aggregates much factory-level detail. Overall area is forecast at 660,777 hectares, 2.2 percent more than in 2009/10 but slightly less than in 2008/09. Sugarcane yield is forecast at 72.6 metric tons per hectare, which compares with 67.1 metric tons in 2009/10. Sucrose recovery is projected at percent, below the 2009/10 level of percent. 4

5 for 90,000 metric tons from all sources, and the second was for 10,000 metric tons from Nicaragua. In its announcement, the SE stated that demand for sugar during the months of October, November, and December 2010 will exceed available domestic supplies. The USDA expects 2010/11 per capita sweetener consumption in Mexico to remain at about the same level as in 2009/10 (i.e., 51.3 kilograms). However, the USDA expects that 2010/11 consumption of HFCS will continue its market growth up to million metric tons, dry basis. This HFCS growth reduces sugar consumption by about 4 percent, or 178,000 MTRV, to million MTRV. 4 Other deliveries are mostly deliveries for the IMMEX program. Its level in 2010/11 is projected at the same approximate level as in 2009/10: 300,000 MTRV. Ending stocks are projected at 22 percent of projected sugar consumption, or 975,000 MTRV. This amount is expected to provide for consumption until the 2011/12 harvest is underway in late November/early December Exports are projected as a residual to equate total use with total supply of million MTRV, or 935,000 MTRV. 4 For 2009/10, sugar consumption, tel quel, is million metric tons and HFCS consumption is million metric tons, dry weight. The sum is million metric tons. Dividing the sum by a population of million yields per capita consumption of 51.3 kilograms. Population growth is forecast at 1.12 percent, implying total 2010/11 sweetener consumption of million metric tons. Subtracting projected HFCS consumption of million metric tons implies sugar consumption of million metric tons, or million MTRV. 5

6 U.S. Sugar On November 9, 2010, the U.S. Department of Agriculture (USDA) released its latest supply and use estimates for fiscal year (FY) 2010 and projections for FY 2011 in the World Agricultural Supply and Demand Estimates (WASDE) report. The estimates for FY 2010 reflect final estimates of stocks, production, and use published in the Sweetener Market Data (SMD) and the latest data from the Foreign Agricultural Service (FAS). U.S. Production Beet sugar production for FY 2010 finished at million short tons, raw value. The early start to the 2010/11 harvest season in the Upper Midwest and Michigan resulted in combined August-September national production of 622,755 short tons, raw value (STRV). Cane sugar production finished the year at million STRV. September production was a bit less than expected in last month s WASDE in Louisiana 19,000 STRV for a year total of million STRV and Hawaii 8,763 STRV for a year total of 161,237 STRV. Beet sugar for FY 2011 is projected at million STRV, down from million STRV in the October 2010 WASDE. The National Agricultural Statistics Service (NASS), in its November 2010 Crop Production report, revised downward from October its forecast of 2010/11 sugar beet yields and production. The latest national yield forecast is 27.7 tons per acre, down from the October forecast of 29.6 tons per acre. Forecasts were decreased for the largest producing States: Minnesota, from 29.0 tons to 27.0 tons; North Dakota, from 29.5 tons to 26.5 tons; Idaho, from 32.2 tons to 30.3 tons; and Michigan, from 29.0 tons to 26.5 tons. National sugar beet production is forecast at million tons, a 4.0-percent reduction from last month s forecast. Cane sugar for FY 2011 is projected at million STRV. Only the forecast for production in Louisiana was changed from last month million STRV, down from million STRV forecast in October. NASS lowered its Louisiana sugarcane yield to 29 tons per acre, a decrease of 2 tons per acre, resulting in a reduction of sugarcane production of 830,000 tons to million tons. Trade U.S. imports from Mexico for FY 2010 were increased by 77,000 STRV to 807,000 STRV on the basis of upward import revisions made by U.S. Customs for August and September. As detailed in the Mexico Sugar and HFCS chapter, FY 2011 imports from Mexico are expected to increase by as much as 27 percent compared with FY The latest forecast for the import total from Mexico is million STRV. Deliveries, Exports, and Stocks According to SMD, FY 2010 deliveries for human consumption are million STRV. Other SMD estimates for FY 2010 are as follows: other deliveries (sugar for product re-exports, polyhydric alcohol, livestock feed), 236,000 STRV; exports, 211,000 STRV; and ending fiscal year stocks, million STRV. Stocks as a percentage of total use (which includes a miscellaneous use estimate of -22,000 STRV) is 13.3 percent. No changes were made to sugar use in FY Deliveries for human consumption remain at million STRV. Using an alternative method of accounting for direct-consumption imports, based on detailed analysis of FAS/U.S. Customs import data, the Sugar and Sweeteners Team at USDA s estimates a lower total of deliveries for human consumption of million STRV. This amount is very close to last month s estimate of million STRV. Additional time is needed to analyze the differences between methods before a rise in projected FY 2011 deliveries is warranted. Ending stocks for FY 2011 are projected as the difference between total supply and use in the WASDE million STRV. This amount implies an ending-year stocks-to-use ratio of 11.3 percent. 6

7 Table 2--U.S. sugar: Supply and use, by fiscal year 1/, 11/15/10 Items 2000/ / / / / / / / / / /11 1,000 short tons, raw value Beginning stocks 2/ 2,216 2,180 1,528 1,670 1,897 1,332 1,698 1,799 1,664 1,534 1,501 Total production 3/ 4/ 8,769 7,900 8,426 8,649 7,876 7,399 8,445 8,152 7,531 7,968 8,230 Beet sugar 4,680 3,915 4,462 4,692 4,611 4,444 5,008 4,721 4,214 4,575 4,800 Cane sugar 4,089 3,985 3,964 3,957 3,265 2,955 3,438 3,431 3,317 3,392 3,430 Florida 2,057 1,980 2,129 2,154 1,693 1,367 1,719 1,645 1,577 1,638 1,720 Louisiana 1,585 1,580 1,367 1,377 1,157 1,190 1,320 1,446 1,397 1,481 1,400 Texas Hawaii Puerto Rico Total imports 1,590 1,535 1,730 1,750 2,100 3,443 2,080 2,620 3,082 3,320 2,744 Tariff-rate quota imports 5/ 1,277 1,158 1,210 1,226 1,408 2,588 1,624 1,354 1,370 1,854 1,409 Other Program Imports Nonprogram imports ,404 1,017 1,035 Mexico 6/ , ,025 Total supply 12,575 11,615 11,684 12,070 11,873 12,174 12,223 12,571 12,277 12,822 12,475 Total exports 3/ Quota-exempt for re-export Other exports CCC disposal, for export Miscellaneous CCC disposal, for domestic non-food use Refining loss adjustment Statistical adjustment 7/ Deliveries for domestic use 10,132 9,974 9,711 9,862 10,188 10,340 10,135 10,704 10,607 11,133 11,060 Transfer to sugar-cont. products for exports under re-export program Transfer to polyhydric alcohol, feed Deliveries for domestic food and beverage use 8/ 10,000 9,785 9,504 9,678 10,019 10,184 9,913 10,501 10,441 10,897 10,875 Total use 10,396 10,087 10,014 10,172 10,542 10,476 10,424 10,907 10,743 11,321 11,210 Ending stocks 2/ 2,180 1,528 1,670 1,897 1,332 1,698 1,799 1,664 1,534 1,501 1,265 Privately owned 1,395 1,316 CCC Stocks-to-use ratio Note: Numbers may not add due to rounding. CCC = Commodity Credit Corporation. 1/ Fiscal year beginning October 1. 2/ Stocks in hands of primary distributors and CCC. 3/ Historical data are from Farm Service Agency (formerly ASCS), Sweetener Market Data (SMD), and National Agricultural Statistic Service, Sugar Market Statistics prior to / Production reflects processors' projections compiled by the Farm Service Agency. 5/ Actual arrivals under the tariff-rate quota (TRQ) with late entries, early entries, and (TRQ) overfills assigned to the fiscal year in which they actually arrived. The 2010/11 available TRQ assumes shortfall of 160,257 tons. 6/ Starting in 2007/08, total includes imports under Mexico's WTO (World Trade Organination) TRQ allocation for raw and refined sugar. 7/ Calculated as a residual. Largely consists of invisible stocks change. 8/ For FY 2007/08 and 2008/09 combines SMD deliveries for domestic human use, SMD miscellaneous uses, and the difference between SMD imports and World Supply and Demand Estimates imports. Percent 7

8 Table 3--U.S. sugar: Supply and use (including Puerto Rico), fiscal years, metric tonnes, 11/15/10 Items 2000/ / / / / / / / / / /11 1,000 metric tons, raw value Beginning stocks 2/ 2,010 1,977 1,386 1,515 1,721 1,208 1,540 1,632 1,510 1,392 1,361 Total production 3/ 4/ 7,955 7,167 7,644 7,846 7,145 6,712 7,662 7,396 6,832 7,228 7,466 Beet sugar 4,245 3,552 4,048 4,257 4,183 4,032 4,543 4,283 3,822 4,151 4,354 Cane sugar 3,710 3,615 3,596 3,590 2,962 2,681 3,119 3,113 3,009 3,078 3,112 Florida 1,866 1,796 1,932 1,954 1,536 1,240 1,559 1,492 1,431 1,486 1,560 Louisiana 1,438 1,433 1,240 1,249 1,049 1,079 1,198 1,312 1,267 1,344 1,270 Texas Hawaii Puerto Rico Total imports 1,443 1,393 1,570 1,588 1,905 3,124 1,887 2,377 2,796 3,012 2,489 Tariff-rate quota imports 5/ 1,158 1,051 1,098 1,113 1,277 2,348 1,473 1,229 1,243 1,682 1,278 Other Program Imports Nonprogram imports , Mexico 6/ , Total supply 11,408 10,537 10,599 10,950 10,771 11,044 11,088 11,404 11,138 11,632 11,317 Total exports 3/ Quota-exempt for reexport Other exports CCC disposal, for export Miscellaneous CCC disposal, for domestic nonfood use Refining loss adjustment Statistical adjustment 7/ Deliveries for domestic use 9,191 9,048 8,810 8,947 9,243 9,381 9,194 9,710 9,623 10,099 10,033 Transfer to sugar-cont. products for exports under re-export program Transfer to polyhydric alcohol, feed Deliveries for domestic food and beverage use 8/ 9,072 8,877 8,622 8,780 9,089 9,239 8,993 9,527 9,472 9,885 9,866 Total use 9,431 9,151 9,084 9,228 9,563 9,504 9,457 9,895 9,746 10,270 10,170 Ending stocks 2/ 1,977 1,386 1,515 1,721 1,208 1,540 1,632 1,510 1,392 1,361 1,147 Privately owned 1,266 1,194 CCC Percent Stocks-to-use ratio Note: Numbers may not add due to rounding. CCC=Commodity Credit Corporation. 1/ Fiscal year beginning October 1. 2/ Stocks in hands of primary distributors and CCC. 3/ Historical data are from Farm Service Agency (FSA), Sweetener Market Data (SMD), and National Agricultural Statistics Service, Sugar Market Statistics prior to / Production reflects processors' projections compiled by the FSA. 5/ Actual arrivals under the tariff-rate quota (TRQ) with late entries, early entries, and (TRQ) overfills assigned to the fiscal year in which they actually arrived. The 2010/11 available TRQ assumed shortfall of 145,383 tonnes. 6/ Starting in 2007/08, total includes imports under Mexico's World Trade Organization TRQ allocation for raw and refined sugar. 7/ Calculated as a residual. Largely consists of invisible stocks change. 8/ For FY 2007/08 and 2008/09, combines SMD deliveries for domestic human use, SMD miscellaneous uses, and the difference between SMD imports and World Agricultural Supply and Demand Estimates imports. 8

9 Table 4--Mexico: Sugar production and supply and sugar and high fructose corn syrup (HFCS) utilization, 11/15/10 Fiscal Year (Oct/Sept) 2000/ / / / / / / / / / /11 1/ 1,000 metric tons Beginning stocks 1,063 1,548 1,172 1,194 1,237 1,965 1,294 1,718 1, Production 5,220 5,169 5,229 5,330 6,149 5,604 5,633 5,852 5,260 5,115 5,450 Imports Supply 6,326 6,769 6,464 6,851 7,654 7,809 7,401 7,796 7,395 6,600 6,648 Disappearance: Human consumption 4,481 5,004 5,097 5,380 5,279 5,326 5,133 5,090 5,065 4,615 4,435 Other consumption Miscellaneous Total 4,623 5,184 5,232 5,600 5,561 5,649 5,523 5,144 5,404 4,890 4,735 Exports , Total use 4,778 5,597 5,270 5,614 5,689 6,515 5,683 5,821 6,771 5,627 5,673 Ending stocks 1,548 1,172 1,194 1,237 1,965 1,294 1,718 1, Stocks-to-human cons Stocks-to-use HFCS cons. (dry weight) ,418 1,650 1/ Forecast Source: USDA, Foreign Agricultural Service, Production, Supply and Distribution Online (historical data); USDA, World Agricultural Supply and Demand Estimates (forecast data). 9

10 Effects of Global Sugar Markets on U.S. Ethanol Several Government policies affecting the U.S. ethanol industry are set to expire on December 31, 2010, under current legislation. Among these is the 54-cent-per-gallon tariff on ethanol imports. Previous analysis suggests that U.S. ethanol imports would increase substantially with the elimination of the tariff. Changes in the sugar market over the past 2 years, however, have affected Brazil s ethanol sector significantly (Brazil is the world s second largest producer and leading exporter of ethanol). The underlying conditions in the Brazilian sugar and ethanol markets are a key factor, regardless of potential legislative actions. Previous analysis on the effects of the U.S. tariff and blending credits on U.S. imports of Brazilian ethanol is that of Elobeid and Tokgoz (American Journal of Agricultural Economics, November 2008). They estimated that net U.S. ethanol imports would nearly triple compared with imports in the study s 10-year baseline model (between 2006 and 2015) if U.S. import restrictions were removed. In a separate scenario, they estimated that net imports would still more than double if the 45-cent-per-gallon U.S. blending tax credit for ethanol were removed in addition to the import restrictions. These results illustrate the important impact that ethanol imports could have on the U.S. ethanol industry. Current prices for corn, sugar, and ethanol, however, have changed substantially from the levels used in Elobeid and Tokgoz s model. Their results were predicated on raw sugar prices that were slightly above 14 cents per pound, corn prices in the range of $2.30-$2.40 per bushel, and U.S. ethanol prices around $1.60- $2.00 per gallon. Current prices are much higher for all three products, changing the market structure for ethanol. Nearby No. 11 sugar contracts have exceeded 30 cents per pound through early November. The 2010/11 season average farm price for corn is projected in the range of $4.80-$5.60 per bushel, according to the most recent World Agricultural Supply and Demand Estimates (WASDE). The Agricultural Marketing Service s (AMS) reported weekly ethanol prices from Iowa have been in the range of $1.95- $2.35 per gallon since the beginning of October. In particular, tight sugar supplies on the global market over the past 2 marketing years have affected the Brazilian ethanol market. Brazilian sugarcane facilities have allocated a larger share of their production to sugar, away from ethanol, in response to high global sugar market prices. Domestic anhydrous ethanol prices in Sao Paulo have increased 47 percent between June 11 and October 29 of this year, according to the Brazilian agency CEPEA. 10

11 Figure 1 Nearby No. 11 sugar contract Cents per pound Nearby No. 11 sugar co ntract Simple analysis can show the relative prices of Brazilian and domestically produced ethanol in the United States. We estimated a delivered price for Brazilian ethanol marketed in the United States by using current exchange rates to convert the Sao Paulo price into a comparable U.S. dollar per gallon price, adding an 11- cent-per-gallon transportation cost (the same as that used by Elobeid and Tokgoz), a 2-percent ad valorem import tax (which is not set to expire), and applying the 54-cent-per-gallon tariff. We also simulated a price series that removes the 54-cent-per-gallon tariff and then compared the prices to U.S. domestically produced ethanol, as reported by AMS. Using this approach, we find that there are periods when the tariff would have helped the competitiveness of U.S. ethanol against Brazilian imports, particularly before July However, recent increases in Brazil s ethanol prices have kept domestically produced ethanol less expensive than imports from Brazil. Additionally, the strengthening Brazilian real, making all Brazilian products more expensive in U.S. dollar terms, has exacerbated the increasing ethanol prices. Prices also rose in 2009/2010 due to lower ethanol production to the extent that the Brazilian Government lowered the mandatory gasoline blending minimum from 25 percent to 20 percent ethanol until the new harvest season helped improve supplies. 11

12 Figure 2 Weekly ethanol prices: U.S. domestic and calculated imported Brazilian ethanol Dollars per gallon Nov-06 3-Feb-07 Sao Paulo ethanol converted to US$/gallon with transportation costs added, no 54 cent-per gallon tariff Sao Paulo ethanol converted to US$/gallon with transportation costs and tariffs added East Iowa ethanolpprice 3-May-07 3-Aug-07 3-Nov-07 3-Feb-08 3-May-08 3-Aug-08 3-Nov-08 3-Feb-09 3-May-09 3-Aug-09 3-Nov-09 3-Feb-10 3-May-10 3-Aug-10 This approach does not take into account any market effects that would occur if the tariff were removed and looks only at a change in tariff rates and not the ethanol blending credit. It does, however, illustrate that the changes in global sugar markets over the past few years should be taken into consideration when analyzing the potential market impacts of any legislative changes affecting the U.S. ethanol industry. 12

13 Contacts and Links Contact Information Stephen Haley, (202) , (coordinator) Mike McConnell (202) , (world sugar) Erik Dohlman (202) , (commodity analyst) Mae Dean Johnson (202) , (web publishing) Subscription Information Subscribe to ERS notification service at to receive timely notification of newsletter availability. Printed copies can be purchased from the USDA Order Desk by calling (specify the issue number). Data Tables from the Sugar and Sweeteners Yearbook are available in the Sugar and Sweeteners Briefing Room at They contain the latest data and historical information on the production, use, prices, imports, and exports of sugar and sweeteners. Related Websites Sugar and Sweeteners Outlook WASDE Sugar Briefing Room, Notification Readers of ERS outlook reports have two ways they can receive an notice about release of reports and associated data. Receive timely notification (soon after the report is posted on the web) via USDA s Economics, Statistics and Market Information System (which is housed at Cornell University s Mann Library). Go to and follow the instructions to receive notices about ERS, Agricultural Marketing Service, National Agricultural Statistics Service, and World Agricultural Outlook Board products. Receive weekly notification (on Friday afternoon) via the ERS website. Go to and follow the instructions to receive notices about ERS outlook reports, Amber Waves magazine, and other reports and data products on specific topics. ERS also offers RSS (really simple syndication) feeds for all ERS products. Go to to get started. The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and, where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or a part of an individual s income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA s TARGET Center at (202) (voice and TDD). To file a complaint of discrimination write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C or call (800) (voice) or (202) (TDD). USDA is an equal opportunity provider and employer. 13