NATIONAL SITUATION AND OUTLOOK

U.S. cane sugar production for FY 2005 is projected at 3.438 million short tons, raw value (STRV), about 13% lower than the previous year. Total sugarcane harvested for the 2004 crop was estimated at 29.295 million tons from an estimated total acreage harvested of 952,100 acres. Sugarcane harvested acreage was down in 2004 in both Florida and Louisiana. The U.S. average sugarcane yield was estimated at 30.8 tons per acre, down for the second year in a row.

U.S. sugarbeet acres planted for FY 2005 (2004 crop year) were estimated at 1.346 million acres, down about 1.4% from the previous year. The national sugarbeet was estimated at 22.9 tons per acre, up slightly from 22.7 tons in 2003. Sugarbeet production was forecast at 29.932 million tons, down 2.5% from last year. Beet processors’ forecast of FY 2005 beet sugar production is 4.705 million short tons, raw value (STRV), an increase of 0.3% over the previous year.

FY 2005 sugarcane and sugarbeet harvested acreage were affected by the marketing allotments in effect for the 2004 crop (FY 2005). On July 16, 2004, the USDA set the Overall Allotment Quantity (OAQ) for sugar marketing allotments at 8.100 million STRV. This allotment quantity represents the quantity of beet and cane sugar allowed to be marketed in FY 2005. This overall allotment quantity was split between the beet states (54.35%) and cane states (45.65%) as stated in the 2002 Farm Bill. As a result, beet states were allocated 4.402 million STRV and cane states were allocated 3.698 STRV. After a reassignment of Puerto Rico’s allotment quantity, Louisiana was allocated a total marketing allotment of 1,404,987 pounds of sugar for FY 2005. This allotment was then allocated to each of the factories processing sugarcane in the state.

The January 2005 WASDE report shows total U.S. supply of sugar at 11.679 million STRV. This total sugar supply was comprised of 1.897 million STRV in beginning stocks, 8.143 STRV of production and an estimated import level of 1.639 million STRV. This U.S. sugar supply level is about 3.2% lower than a year earlier.

On the demand side, sugar use is projected to decrease slightly in FY 2005. Total U.S. sugar use for FY 2005 is projected at 10.105 million STRV, down 0.4% from a year earlier. Total domestic use of sugar is projected up slightly, at 9.905 million STRV. Domestic food use is forecast at 9.715 million STRV.

Ending stocks for the current fiscal year (FY 2005) are expected to be down substantially, primarily the result of decreased cane sugar production. The January WASDE report estimated U.S. ending sugar stocks at 1.574 million STRV, down 17.0% from the previous year. These projected ending stock levels result in a stocks-to-use ratio of 15.6%, down from 18.6% in FY 2004.

PRICE OUTLOOK 

Raw sugar prices during the 2004 calendar year fluctuated around the 20.5 cent per pound level and were generally about one cent below 2003 prices. U.S. raw sugar prices averaged 20.54 cents per pound in January 2004 and increased to 20.88 cents in April; however, prices softened over the summer, decreasing to 20.10 cents by August. Raw sugar prices did improve slightly during the fall of 2004 as a result of lower cane sugar production, but were still below 21.0 cents per pound.

In 2004, 718 sugarcane growers (a decrease of 15 growers or 2.0%) in 24 Louisiana parishes grew sugarcane on 461,738 acres (a decrease of 18,947 acres or 3.9% when compared to the 2003 crop). An estimated 424,799 acres were harvested for sugar (assuming 8% of the total acres were used for seed cane purposes), with a total production of 1,174,028 short tons of sugar (a decrease of 230,518 short tons or 16.4%). Sugar produced per harvested acre was 5,527 pounds (a decrease of 13.0%), and sugar produced per total acre (including acres used for seed cane purposes) was 5,085 pounds (a decrease of 13.0%). The 15 factories reported an average recovery of 204 pounds of sugar (96 pol) per gross ton of cane processed (a decrease of 8 pounds/ton or 3.8%). Accordingly, the average field yield would be approximately 24.9 tons per total acre (a decrease of 2.7 tons or 9.8%) and 27.0 tons per harvested acre (a decrease of 3 tons or 10%). The gross farm value of $305,416,271 for sugar and molasses (a decrease of $48,950,685 or 13.8%), as reported in the crop production statistics, is 60% of the value of the sugar and 50% of the value of the molasses produced, with the remaining percentage going to processing and marketing.

The total acreage reported, 461,738 acres, for 2004 is the smallest area grown for sugar since the 1999 crop year when 463,000 acres were grown. Louisiana produced a record crop in 1999 of more than 1,675,000 tons of sugar (Raw Value). Many growers were, undoubtedly, worried about marketing allotments and Proportionate Shares, and they chose to reduce their acres voluntarily. Further, many growers had to plow under unproductive fields in the spring of 2004 that were previously affected by harvesting equipment during the 2002 crop year because of the persistent wet weather.

Approximately 91% of the 2004 crop was planted to one variety, LCP 85-384, a new record for a single variety in modern history. Further, 47% of the 2004 crop was in second and older stubble that had been harvested during the 2002 harvest as plant-cane and first and older stubble. Even the first-stubble crop for 2004 was affected by the wet weather of 2002, because many growers were not able to plant their full complement of cane. The 2004 crop year was one of contrast as well, with above-normal average rainfall and below-normal average temperatures in April and May and below-normal average rainfall during the summer. This weather pattern was followed up by an unusually warm October and November with both temperatures and rainfall well above normal. Excessive rainfall occurred with the passage of Tropical Storm Matthew just as the 2004 harvest season got under way, causing many factories to delay their start because of wet fields. Rainfall again caused wet field toward the end of November and for most of December. For those growers able to harvest before Tropical Storm Matthew, the yield of sugar per ton of cane was generally excellent, especially where the chemical ripener glyphosate had been used. For most growers, however, the excellent sugar yields were offset by low field yields, especially in older stubble fields.

Because of the relatively mild winter, there was good early growth of the crop. In many cases, growers decided to begin fertilizer programs earlier than normal; however, excessive rainfall occurred in April and extended into May. Water table remained high, and the crop did not respond well to added fertilizer. In several instances, growers fertilized a portion of their crops a second time because they felt that much of their nitrogen fertilizer had been lost to the excessive rainfall and high water table. Early growth measurements, however, were good in many areas. Then in June, the weather pattern changed, and little or no rainfall occurred for eight to 10 weeks or longer. With the excessive early rain, most of the sugarcane roots could be found just under the surface of the soil. Once the soil dried out with the onset of the drought, sugarcane growth decreased dramatically because the roots could not find available water. During the grand growth phase, which normally occurs in June, July and August, it is not uncommon to have sugarcane grow at a rate exceeding 1 inch per day. However, because of the mid-summer drought, there were instances in the western sugarcane area where the growth rate was less than an inch per week. Further, it was noted that along with the earlier high rainfall and low temperatures, many fields, especially those fertilized early, were severely affected by rust, which lasted well into the summer. Then with September rain and higher than normal temperatures in October and November, the cane returned to a vegetative state. Without glyphosate, this cane did not mature as expected, with lower than anticipated yield of recoverable sugar per ton of cane throughout the harvest. Further, it was noted that the cane in many fields had a dark green appearance as if fertilizer had just been applied. In those fields with available nitrogen and with lodged cane, water suckers (‘bull shoots’) were present that, undoubtedly, contributed to low sugar yields late in the season.