Sugar Beets

Industry drivers

Planting delays, but improvements in water outlook

Sugar beet growers will benefit from favorable planting and market conditions. Early growing conditions have significantly improved, supporting forecasted higher yields for the 2023 crop. Sugar beet planting was delayed due to the cold, wet spring, but irrigation for beets will benefit from the extra moisture. May 14 is considered the critical window for optimal planting; beets planted after this date are expected to have lower yields. For Idaho, 99% of sugar beets were planted by May 14, 2023, above the 5-year average of 95%. While there were scattered storms in western Idaho, few beets had to be replanted. The Northwest sugar beet crop remains a little over a week behind in most states. On June 12, only 13% of Montana’s beet crop had emerged, down from 57% at the same time in 2022.

The Red River Valley (the largest sugar beet production area consisting of eastern North Dakota and western Minnesota) was battling the ideal planting date deadline due to cold, wet spring weather. By May 7, only 12% of Red River Valley sugar beets had been planted. This was followed by a week of ideal weather and the planted acres increased to 67% on May 14. On May 22, 2023, more than 95% of national sugar beet acres were planted, nearly double the acres from the same time last year.

U.S. beet production increases, but higher shrinkage is expected

The USDA projects sugar beet production for 2023 at 33.3 million tons, up 2.4% year over year largely driven by yield improvements. While national acres declined 4% due to the closures of Sidney Sugars and acreage reductions in the Midwest, yields support production increases in 2023. Yields are expected to increase from last year as double the nation’s sugar beet acres were planted within the ideal planting window. Improvements to early conditions are expected to boost national yields to 30.8 tons per acre, a 2.2 ton per acre increase from 2022. However, sugar production from beets is expected to decline 4% year over year on higher shrinkage. As weather patterns shift to El Niño conditions (expected to happen this summer), beet storage has historically been comprised leading to more beet shrinkage. Timely beet plantings also support better overall crop conditions. Nationally, the percentage of sugar beets in good or excellent condition improved for seven of the eight major beet-producing states. Michigan was the exception as dry weather impacted beet conditions. Northwest beet conditions have improved over the last year. On June 19, 2023, 88% of Idaho’s sugar beets were in good or excellent condition. In Oregon, 80% of the sugar beet crop was in good or excellent condition. While not yet quantified, anecdotal reports indicate that Montana is experiencing more favorable weather and better crop conditions than in 2022.

Sugar beets in good or excellent condition

Source: USDA Planting Progress, Complied by Agwest.
*No sugar beet conditions have been reported in Montana for 2023. 

Tight global supplies support strong sugar prices

Sugar prices rose to decade highs over supply concerns spurred by tight global stockpiles and shifts in Brazil’s biofuel production. After India announced they would not increase fall exports on April 24, 2023, raw sugar prices rose to an 11-year price record eclipsing $0.27 per lb. At the same time, Brazil (the world’s largest global exporter) had heavy rains delaying harvest which led to tighter stockpiles. Brazil also implemented gasoline taxes which incentivized sugar mills to focus on ethanol production, artificially lowering their sugar production. Brazil sugar mills can switch from crushing sweetener to making ethanol.

Global raw sugar prices have softened since late April as weather supported better yields than initially anticipated. Weather forecasts suggested a high likelihood of El Niño weather patterns starting in May. El Niño conditions typically hurt production in the three largest sugar exporter countries bringing rainy harvests to Brazil and dry monsoons to Thailand and India. However, these regions have not experienced the anticipated weather challenges, easing sugar market concerns and softening raw sugar prices to $0.25 per lb. in Mid-June.

While global prices have softened, there is still potential for upward price pressure driven by weather and low inventories. Domestic sugar prices follow global prices. As global sugar prices peaked on April 24, so did U.S. raw sugar prices. Higher domestic sugar prices are beneficial to producer payments. The domestic sugar price outlook is bullish as anticipated reductions in sugar beet and cane acres will limit supplies, therefore supporting higher prices.

U.S. raw sugar prices

Source: Sugar No. 11 Futures, Complied by Agwest.

Profitability

Beet growers should benefit from strong sugar prices, favorable demand and improvements in growing conditions. Global sugar markets are expected to remain tight in the coming year, which will support strong sugar prices. Growers will also benefit from strong demand for beets and some processors are allowing growers to fulfill up to 103% of their contracted beets to meet processor needs. Growing conditions have been favorable for most U.S. beet growing regions, supporting stronger yields and a larger crop. Higher sugar prices will benefit growers, despite elevated input costs that could offset some of these gains (See Crop Input Snapshot). Input costs are slowly coming down while prices should increase leading to a profitable 2023 crop.