KANSAS CITY — In a June 1 Sosland Publishing Company Purchasing Seminar webcast, Craig Ruffolo, vice president and partner of McKeany-Flavell, forecast bulk refined beet sugar prices at 36¢ to 37.5¢ a lb f.o.b. mill and refined cane prices at 38.5¢ to 41¢ f.o.b. in the 2020-21 marketing year, which begins Oct. 1. However, he sees the potential for sweetener prices to weaken in 2021.
The sugar price forecasts for next year compare with current spot values of 48¢ to 50¢ a lb f.o.b. for refined cane sugar, with no offers available for beet sugar, he said.
In his presentation, Mr. Ruffolo highlighted the events of the past year that reshaped the 2019-20 sugar market and set up the market for 2020-21. Those events included a drop in US beet sugar production of about 900,000 tons from a year earlier that led to force majeures by two beet sugar sellers in November 2019, a weather-reduced Mexican cane crop that reduced potential sugar exports to the United States and actions by the US government to increase the sugar imports.
He noted that the US Department of Agriculture’s forecast 2019-20 ending stocks-to-use ratio of 10.4% indicated continued tight supplies and potential for increased imports to boost supply.
Mr. Ruffolo also noted that the coronavirus has resulted in significant uncertainty about sugar demand going forward. Sugar deliveries as reported by the USDA were stronger than expected in March, at least in part due to hoarding by consumers. If that strong demand persists, sugar sellers will “stay adamant about current price levels,” he said, noting very low beet sugar inventories.
Mr. Ruffolo expects a 50,000- to 100,000-ton reduction in sugar deliveries between May and the end of the marketing year (Sept. 30), which will help offset the need for additional imports. The USDA needs to be “very mindful” of a potential decline in deliveries as it manages the import supply, he said.
He noted late planting in North Dakota and recent adverse weather in Michigan has made the beet industry cautious in its pricing. He urged the industry to carefully watch beet crop progress for indications of how much new crop sugar may be available in the current crop year from early beet harvest. If sufficient new crop supply isn’t available early, there could be concern about physical availability of sugar in September he said.
Mr. Ruffolo indicated that there were not a lot of requests for contracting sugar for 2020-21, but that he expected activity to increase in the next 30 days.
When asked if 2020-21 beet sugar prices may return to last year’s levels in the 33.50¢ to 34¢ a lb range, Mr. Ruffolo said it’s possible but “not probable” as “everything” would have to fall into place.
For corn sweeteners, Mr. Ruffolo forecast 2021 prices for bulk 42% high-fructose corn syrup at $15.50 to $16.50 per cwt, down from $16.50 to $17.50 in the current year, and prices for 42DE corn syrup at $22.50 to $25 per cwt compared with $22 to $24 per cwt this year.
He said the net cost of corn should be about 25¢ a bu lower in 2021, which would give corn refiners “no argument for higher prices” based on that. He noted expectations of a large corn crop and higher prices for co-products (distillers’ dried grain) due to lower supplies of co-products as the result of reduced ethanol production. However, he also noted that corn refiners have reduced HFCS production capacity over the years to keep supply in balance with demand.