June WASDE makes a big cut to sugar ending stocks due to late Red River Valley sugarbeet planting

The U.S. Department of Agriculture on Friday, June 10, reduced the anticipated ending stocks for sugar by nearly 303,000 short tons based on late planting in the Red River Valley of Minnesota and North Dakota.

The reduction came in the World Agricultural Supply and Demand Estimates, released Friday.

"The reduction is based on late plantings that imply a national sugarbeet yield of 27.88 tons/acre, the lowest level since 2014-15 when similar delays in planting occurred," the report said.

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That could open the door to more sugar imports from Mexico if the expectations that late planting will lead to lower yield hold out into July, when the USDA will rebalance import limits based on the expected stocks-to-use ratio.

Besides lowering yields, the USDA also anticipated that the later planting would push more of the sugarbeet harvest season beyond Sept. 30.

Planting in Minnesota and North Dakota has lagged weeks behind normal progress. As of the Crop Progress report released June 6, sugarbeet farmers in the two states were 90% and 92% completed with planting, respectively, compared to the five-year average of 99% and 100%. Though the 90% and 92% rates don't sound significantly off of normal progress, about three quarters of the planting progress had been completed in the previous two weeks.

With no significant change in usage expectations, the reduction in yield would lead to a stocks-to-use ratio of 7.65%.

"That is considered pretty tight," said Mark Jekanowski, chairman of the World Agricultural Outlook Board at USDA. "Unusual to see it — stocks-to-use ratio — in the single digits."

Jekanowski said it also is worth noting that USDA will rebalance the sugar balance sheet, based on a 13.5% stocks-to-use ratio, which will then help set the import limit from Mexico. That means more raw sugar imports from Mexico will be allowed to maintain an adequate sugar supply in the U.S.

Jekanowski said "Mexico has had a great year" for sugar production, which is winding up, and domestic use there also has been off to a strong pace.