Food Business News - August 16, 2011 - (Page 29)

Market Insight F ood processors dealing with historically high sugar prices are hoping U.S. Department of Agriculture actions (and adjusted government data) ease the late-year supply strain until new crop beet sugar becomes available, but the weather must also cooperate on several fronts. With major sugar cane and beet processors offering bulk refined sugar at 59@60c a lb through 2012, sugar users are dealing with historically high prices with no short-term letup in sight, and the potential for even stronger values should “Mother Nature” prove uncooperative. The greatest worry for sugar buyers and even sellers is a hurricane hitting near New Orleans, the site of two major cane refineries. Any significant down time at those facilities may send sugar prices to the stratosphere in the latter half of 2011 as alternative sources of sugar are limited. A hurricane hitting the “right” part of Florida also could be devastating. The hurricane season runs July through October. Weather also is an issue farther north where late-planted RON STERK sugar beets (mainly in the topproducing Red River Valley) need as late a frost as possible to maximize potential. Grower cooperatives likely will delay beet harvest as long as practicable to maximize sugar content but before any benefits are offset by frost. Processors also are keeping an eye on sugar beet crop conditions, which have slipped the past couple of weeks in the Red River Valley. Rated good to excellent as of Aug. 7 in Minnesota was 58% of the crop, down from 61% a week earlier and compared with 89% a year ago, and in North Dakota was 72%, down from 79% both the previous week and last year, according to U.S.D.A. field offices. In its Aug. 11 Crop Production report, the U.S.D.A.’s first 2011 sugar beet production estimate was 30.4 million tons, down 5% from 2010, with harvested area estimated at 1.22 million acres, up 5% from a year ago, and yield at 25 tons an acre, down about 10%. Last year bulk refined beet sugar was offered at 45c a lb f.o.b. through May and rose to 64c the first week of September. But early sales of new crop sugar, the result of an exceptionally early sugar beet harvest, contributed to prices falling back to 54c by the end of September 2010, prior to the new marketing year starting Oct. 1. This year’s later harvest means new crop sugar will hit the market later, prolonging the tight supply situation rather than providing new supply early. Also last year Mexico began its cane harvest early and contributed additional supply to the United States as shipments rose sharply in the October-December period of 2010 from the same period a year earlier. This year, Mexico has faced its own weather problems (drought and frost in some areas) and shipped so much sugar to the United States in the first half of the year it may have to import as much as 300,000 tonnes before the end of 2011. Shipments of Mexican sugar to the United States plunged sharply in June from May, according to U.S.D.A. data, and any major uptick in shipments the rest of this year is unlikely because of the tight supply situation in Mexico. But data from Mexico may be “surprising,” even when funneled through U.S. agencies. In its Aug. 11 World Agricultural Supply and Demand Estimates, the U.S.D.A. boosted its estimate of U.S. imports of Mexican sugar by 220,000 tons for the current year to a record 1,624,000 tons, “due to higher imports from Mexico which reflect corrected import data for June and a stronger-thanexpected pace for the rest of the fiscal year.” In July, the U.S.D.A. reduced projected imports of Mexican sugar by 110,000 tons. Confused traders awaited new data and an explanation about the data changes. In an effort to ease tight supplies in the last quarter of 2010-11 (July-September), the U.S.D.A. on Aug. 1 said it would allow entry of 2011-12 tariff rate quota (T.R.Q.) imports beginning Sept. 1, 2011, a month before the new marketing year begins. But the “found” Mexican imports reflected in the August WASDE boosted the 2010-11 ending stocks-to-use ratio to a respectable 15.5%, the highest since 2007-08, reflecting adequate supplies. Should the United States or Mexico need to turn to the world market for additional sugar, recent lower output estimates from top-producing Brazil, and last week’s first ever import quota of 50,000 tonnes by Guatemala to ensure supplies to year end, indicate tightening supplies and likely continued firm prices. FBN August 16, 2011 FOODBUSINESS NEWS ® 29

Table of Contents for the Digital Edition of Food Business News - August 16, 2011

Food Business News - August 16, 2011
Ralcorp to buy Sara Lee refrigerated dough business
Whey protein’s emerging mass appeal
Gluten-free labeling in the spotlight
Web Contents
Editorial - Search for insights in P.&G.’s farewell to food
Nestle profi t down in fi rst half of year
Sara Lee income up sharply in year
Pilgrim’s Pride’s second-quarter earnings plunge
Snyder’s-Lance swings to loss in quarter
Consumers taking active role in beverage trends
Cargill recalls 36 million lbs of ground turkey
Consumers more concerned with fat, calories than HFCS
Investment group partnering with Kettle Cuisine
Smart Balance purchases gluten-free food company
Sunsweet acquires Function Drinks
Kraft's big Split
Additional amicable separations
Ralcorp to buy Sara Lee refrigerated dough business
Ralcorp net down on impairment charge
F.D.A. warns Lazy Larry brownies are unsafe
Cott income climbs 19% in second quarter
Lower salad volumes contribute to loss at Chiquita
Restaurant Performance Index above 100 in June
Cost and taste remain barriers for functional foods
Sugar prices strong as supplies tighten
Gluten-free labeling in the spotlight
Health and wellness remains at the heart of oil innovations
Inside the guar gum bubble
Use hydrocolloids to save on costs
Dairy Business News
Conditions remain diffi cult for Dean Foods
Dean Foods suffers loss after litigation charge
Whey protein’s emerging mass appeal
Adding ethical value
Dannon adds Greek Oikos to portfolio
Caribou adds ‘Grown-up Grilled Cheese’ to menu
Beech-Nut to co-brand baby food with Mott’s
Earth’s Best expands Sesame Street line
Popchips introduces jalapeño variety
Kettle Brand launches reduced-fat chip line
Tropical fl avor line extends beyond familiar
SunOpta completes purchase of juice company
Spicetec names director of marketing
Carton protects fragile products
GPC hires scientist, sales representative
F.D.A. has no objection to krill oil’s GRAS status
Birko to buy maker of washing, pasteurizing systems
Ingredient Markets
Ad Index
Food Business in the News

Food Business News - August 16, 2011