NAPA, CALIF. — Well-known market analyst Frank Jenkins, president, JSG Commodities, said he believes US 2022-23 sugar supplies are larger than indicated in the US Department of Agriculture’s July World Agricultural Supply and Demand Estimates (WASDE) report, with 2023-24 production declining due to dry weather and deliveries above the USDA forecast, which means more imports will be needed from Mexico. The USDA estimates may be revised in the Aug. 11 WASDE.

Mr. Jenkins estimated the 2022-23 ending stocks at 2,074,000 tons and the ending stocks-to-use ratio at 16.36%, compared to the USDA’s 1,841,000 tons and 14.45%, respectively. He forecast total supply at 14,746,000 tons, based on beginning stocks at 1,820,000 tons (same as the USDA), US production at 9,242,000 tons (same as the USDA, and imports at 3,684,000 tons (225,000 tons re-export imports, 1,868,000 tons tariff-rate quota, 1,176,000 tons Mexico and 415,000 tons high-tier) versus total supply of 14,581,000 tons forecast by the USDA, including imports at 3,519,000 tons (125,000 tons re-export imports, 1,868,000 tons TRQ, 1,176,000 tons Mexico and 350,000 tons high-tier). Mr. Jenkins forecast sugar deliveries for food in 2022-23 at 12,532,000 tons (up 0.5% from 2021-22) compared to the USDA’s forecast of 12,600,000 tons (up 1.04% from last year).

He noted that domestic sugar deliveries have been slow in the past quarter, at least in part due to lower inventories held by food manufacturers amid rising food prices.

For next year (2023-24 beginning Oct. 1), Mr. Jenkins forecast US sugar production at 9,109,000 tons, with beet sugar around 5,050,000 tons and cane around 4,059,000 tons. Those forecasts are down about 100,000 tons for beet and 60,000 tons for cane from his initial forecasts due to dry weather in Michigan and North Dakota for beet sugar and Louisiana for cane sugar. The USDA in July forecast 2023-24 US sugar production at 9,199,000 tons, including 5,022,000 tons of beet and 4,177,000 tons of cane. He also forecast sugar deliveries for food at 12,657,000 tons (up 1% from 2022-23), compared with the USDA’s forecast of 12,600,000 tons (unchanged from 2022-23). Lower US production numbers would be made up by an increase in Mexico’s export quota, he noted.

Mr. Jenkins said a high level of high-tier imports (once considered the supply of last resort) “seems to be ingrained in the market.”

“The (suspension) agreements with Mexico are the only reason high-tier imports work,” he said, noting that an increase in high-tier imports reduces Mexico’s quota but doesn’t affect total US sugar supply.

He added that Mexico had to import more than 100,000 tonnes of sugar this year as prices in Mexico are higher than in the United States. Such imports violated the US-Mexico suspension agreements, he said.

“The relationship with Mexico is teetering in a very dangerous way,” Mr. Jenkins said.