Sugar Update - 2012

An Expert's View about Tropical and Subtropical Fruits, Sugar Cane in Argentina

Posted on: 10 Nov 2012

Good weather during harvest time resulted in a slight recovery in production, which is now set at 2.09 million tons (raw basis).

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 10/18/2012 GAIN Report Number: Argentina Post: Buenos Aires Argentine Sugar Update - 2012 Report Categories: Sugar Approved By: Melinda Sallyards Prepared By: Ken Joseph Report Highlights: Good weather during harvest time resulted in a slight recovery in production, which is now set at 2.09 million tons (raw basis). Exports are expected to decline 40,000 tons from our previous estimate. Ending stocks are forecast to increase significantly at almost 300,000 tons (raw basis), putting downward pressure on local sugar prices. The industry is expected to sign an agreement by which it will immobilize a large volume of sugar which will only be released when exported. General Information: Production: Sugar production for 2012-13 is raised slightly from our previous estimate to 2.09 million tons as a result of more sugar cane than previously forecast. The weather in the production area, but primarily in Tucuman, the largest producer, was very erratic during the season. Until March, plantations suffered a strong drought, which ended in April where rainfall was significantly higher than normal. The harvest began in early May showing low yields at the mill. However, warmer weather than usual during May and June, and practically no frosts nor rain during the harvest season, allowed some recovery in both sugar cane production and in industrial yields. The harvest is practically coming to an end, except for one mill in Salta which will continue to operate in November. The higher production of sugar cane was utilized to produce more sugar and ethanol. Bioethanol production was practically at full capacity as in most cases returns were higher than sugar. Practically 10 percent of the sugarcane production was crushed directly for bioethanol. Sugar prices during this season were lower than last year’s as high initial stocks and lower than needed exports put downward pressure on the market. The sector knows that it is essential to export the surplus sugar in order to have an orderly marketing season. Production costs have increased significantly from last year. Contacts indicate that large, efficient sugarcane producers will have positive returns, but many others could suffer losses. Consumption: It is revised slightly downward at 1.83 million tons (raw value basis) as the economy is showing a slower pace than earlier anticipated. Consumption is still estimated to be marginally higher than in season 2011-12. Trade: Argentine total sugar exports are lowered from our previous forecast to 220,000 tons (raw value basis). At the beginning of the harvest, prices in the domestic market were higher than in the export market, encouraging mills to sell in the local market rather than exporting. Prices since then have come down significantly. Stocks: Ending stocks for crop 2012-13 are now estimated at almost 300,000 tons (raw value basis), significantly higher than our previous projection. This is a result of higher sugar production than expected and smaller exports and domestic consumption than earlier projected. This high volume of stocks, equivalent to the local consumption of two full months, is putting a lot of pressure on the market. The local sugar complex is expected to soon come to an agreement by which they will put aside under warrants a significant volume of sugar. As exports come through, the sugar is then taken out from this immobilized volume. Some contacts are somewhat skeptical about the results of such mechanism. Production, Supply and Demand Data Statistics : Sugar, Centrifugal Argentina 2010/2011 2011/2012 2012/2013 Market Year Begin: Jun 2010 Market Year Begin: Jun 2011 Market Year Begin: Jun 2012 USDA Official New Post USDA Official New Post USDA Official New Post Beginning Stocks -12 -12 84 84 262 255 Beet Sugar Production 0 0 0 0 0 0 Cane Sugar Production 2,030 2,030 2,150 2,150 2,040 2,090 Total Sugar Production 2,030 2,030 2,150 2,150 2,040 2,090 Raw Imports 0 0 0 0 0 0 Refined Imp.(Raw Val) 52 52 3 3 2 2 Total Imports 52 52 3 3 2 2 Total Supply 2,070 2,070 2,237 2,237 2,304 2,347 Raw Exports 114 114 95 97 110 110 Refined Exp.(Raw Val) 82 82 50 75 150 110 Total Exports 196 196 145 172 260 220 Human Dom. Consumption 1,780 1,780 1,820 1,800 1,864 1,820 Other Disappearance 10 10 10 10 10 10 Total Use 1,790 1,790 1,830 1,810 1,874 1,830 Ending Stocks 84 84 262 255 170 297 Total Distribution 2,070 2,070 2,237 2,237 2,304 2,347 1000 MT Sugar Cane for Centrifugal Argentina 2010/2011 2011/2012 2012/2013 Market Year Begin: Jun 2010 Market Year Begin: Jun 2011 Market Year Begin: Jan 2012 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 330 330 350 350 380 380 Area Harvested 325 325 345 345 360 360 Production 19,900 19,900 21,400 21,400 20,800 21,500 Total Supply 19,900 19,900 21,400 21,400 20,800 21,500 Utilization for Sugar 18,900 18,900 19,800 19,800 19,200 19,500 Utilizatn for Alcohol 1,000 1,000 1,600 1,600 1,600 2,000 Total Utilization 19,900 19,900 21,400 21,400 20,800 21,500 1000 HA, 1000 MT
Posted: 10 November 2012

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