1 / 33

US and Mexican Sugar Complex

The presentation delves into the complexities of the US and Mexican sugar trade, highlighting critical developments from recent years. It investigates how the USDA's inability to regulate US sugar imports has led to market fluctuations and legal challenges, including dumping allegations against Mexican sugar exports. With the upcoming ITC decision critical for the future landscape of sugar trade, the session outlines potential outcomes, including a return to managed trade or a reversion to recent practices that jeopardize the US sugar program.

adelle
Télécharger la présentation

US and Mexican Sugar Complex

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. US and Mexican Sugar Complex A return to managed (and manageable) trade? August 4, 2014 Stowe, Vermont

  2. Agenda: • Recent past • Defaults, Dumping, Devastation • Current situation and evolution to “New NAFTA” • Mexico and US S&D • Assumptions • Outlook • Conclusions

  3. Our story thus far… • In past two years, USDA lost its ability to manage the US sugar program • Inability to limit Mexican shipments was the cause • ASC has sued at the ITC, asserting dumping and illegal subsidization • Outcome of case, likely in early 2015, will: • Return US to managed (and manageable) sugar trade, or • If case is dismissed, revert to recent form and imperil US Sugar Program

  4. The Inmates Running the Asylum

  5. Mexican exports to the US:October 2010-May 2014 Source: USDA/FAS & Census

  6. Mexico’s seat at the US table:Imports - 1,000 STRV Source: USDA/FAS

  7. Mexico’s seat at the US table:as a % of total imports Source: USDA/FAS

  8. US Sugar production:1,000 strv US sugar production down 756,000 tons in two seasons Source: USDA

  9. US & Mexican Sugar production:1,000 strv US & Mexican production down 1.731 million tons Source: USDA

  10. US & Mexican Balance:Production – Consumption 1,000 strv 172,000 surplus 1.830 million deficit 3.055 million deficit Source: USDA

  11. US base imports: • FY’14 Imports • Mandatory access: • TRQ • Raw 1.231 million strv • Refined 134,482 strv (not all mandatory) • FTA 203,046 strv • Total 1.568 million strv • Discretionary • Re-export 210,000 strv Total: 1.779 million strv

  12. How To Get Program Back Under Control?:

  13. Regaining control: • Today • 1.8 million tonne reduction in US and Mexican production has given the reins back to USDA • Longer term: • Limit Imports from offshore • AD/CVD case • Limit domestic marketings, if necessary

  14. US International Trade CommissionInvestigation nos. 701-TA-513 and 731-TA 1249 – Sugar from Mexico • Seeks the institution of antidumping and countervailing duties (AD/CVD) on sugar exported from Mexico • The petitioner is the American Sugar Coalition • Alleged dumping margin: 30.00 % to 64.31 % • Subsidization covers a range of actions from tax and interest forgiveness to the sale of mills at below market value

  15. Important Dates*: *Estimated and subject to change Source: ITC Handbook

  16. Mexican and USSupply and Demand

  17. Mexico: • 2013-14 crop 955,000 lower than prior year. • Exports to US heavily front-loaded as tail of record 2012-13 crop was cleared • Sept. 30 stocks insufficient to bridge to new crop – last crop, week ended November 30th was the first where production exceeded consumption • Working assumption: 10.5 weeks of stocks needed on September 30. Only roughly 7.5 weeks on hand Sept 30, 2014 – imports likely

  18. Mexico FY’14: 1,000 MTTQ USDA (July) JSG Beginning stocks 1460 Production 6020 Imports 250 Total supply 7730 Exports2358 US 1717 ROW 641 Food use 4690 Total use7048 Ending stocks 682 • Beginning stocks 1460 • Production 6025 • Imports 226 • Total supply 7711 • Exports 2358 • US 1717 • ROW 641 • Food use 4690 • Total use 7048 • Ending stocks 663 Average ending stock last 10 years: 1.220 million mttq Source: USDA/JSG

  19. USDA vs. JSG S&D: FY’14 2013-14 USDA 2013-14 JSG Source:USDA/JSG

  20. Mexico FY’15: 1,000 MTTQ USDA (July) JSG Beginning stocks 682 Production 5900 Imports 250 Total supply 7032 Exports1395 US ? ROW ? Food use 4690 Total use6085 Ending stocks 947 • Beginning stocks 663 • Production 6140 • Imports 450 • Total supply 7253 • Exports 1616 • US 1606 • ROW 10 • Food use 4690 • Total use 6306 • Ending stocks 947 Average ending stock last 10 years: 1.220 million mttq Source: USDA/JSG

  21. USDA vs. JSG S&D: FY’15 2014-15 USDA 2014-15 JSG Source:USDA/JSG

  22. 2014 Beet Crop: • For Colorado, Michigan, Minnesota, North Dakota and Wyoming: • Together account for 74.33 % of forecast harvested area for 2014 crop • Minnesota 37.38 % Weighted average for these states as of 7/28: Very Poor Poor Fair Good Excellent 1 11 37 38 13 Source: NASS/USDA

  23. Beet crop condition: MN Source: USDA/FAS

  24. Beet crop condition: MN Source: USDA/FAS

  25. USDA vs. JSG S&D: FY’15 No resolution 2014-15 USDA 2014-15 JSG Additional imports of 1.597 million tons needed to achieve 13.5 % stocks/use ratio Source:USDA/JSG

  26. Assumptions: • AD/CVD case will likely run its full course • No final determination until Late December/early January • Suit will succeed • Mexico not a meaningful exporter before February • Will likely import in Q4 • Mexico is only a net surplus producer due to access to US economics • Production will drop to match consumption if prohibitive duty is imposed and maintained

  27. Outlook: • Unsettled transition to the new reality: • Managed market with USDA setting supply • If case is not settled until the Q1’15 and no further action is taken to increase supply: • October through March/April – ample physical supply, but market starved for price liquidity • 67 % of pricing accommodated in artificially tight environment • If USDA announces a further TRQ increase before September 30: • Too much physical sugar, too much selling for November. Existing Q’4 supply displaced – turbulence • Removes “capital” to finance an eventual deal with Mexico

  28. Outlook cont. • 2014-15 • No increase this summer, no deal with Mexico by March • March and May futures 28.00 - 30.00, refined prices in 36.00-39.00 • July and September 4.50 over #11 – 23.00 • Disproportionate selling in final 33 % of year • 200,000 tonne (refined?) increase in September for arrival by November • November 23.50, May 26.50, refined 33.50-35.00 • July and September 4.50 over #11 – 23.00 • Beyond • Once Mexican access is defined, orderly market with either WTO quota holders or Mexico filling US deficit • #11 will be relevant driver for US pricing • USDA temperament and/or level of Mexican duty critical

  29. You get what you pay for:#16 raws vs. #11 raws: 4/1/13 – 7/31/2014 Source: ICE Futures US

  30. World Market Relevance: • World market likely headed into deficit • #11 market well below Brazilian cost of production/level needed to spur investment • US raws price needs to be 2.50 to 3.50 cents over #11 for import parity • If AD/CVD is imposed and sustained, Mexico will remain a threat • World market weakness can translate into lower US values

  31. Conclusions: • We have no conclusions • Draw your own conclusions at your peril • What we think we know: • Transition to New NAFTA will be rocky • Prices will remain firm through the spring of 2015 • From there, the script remains to be written

  32. Thank you!

  33. US and Mexican Sugar Complex A return to managed (and manageable) trade? August 4, 2014 Stowe, Vermont

More Related