Western Sugar declares force majeure
The Western Sugar Cooperative (which operates in four states: CO, MT, NE, WY) declared force majeure and reduced it’s 2022-23 sugar deliveries by 12%. The cooperative cited an early freeze which required beet acres to be replanted and hail damage as the primary reasons for lower production. Western Sugar’s allocated market share is 590,415 tons of sugar, about 10% of the U.S. sugar market in normal production year (with the smaller 2022 crop, this would be about 12% of total beet sugar).
Montana slicing campaigns will end early
In eastern Montana, late snow delayed planting and growers reported impacts from summertime flooding and disease. Growers in north-eastern Montana had problems with a fungus disease that stifles root growth. Despite these challenges, Sidney Sugar reported yields of 26.9 tons per acre with 17% sugar content (18% is industry standard). The Billings, MT, plant averaged 32 tons per acre with 17% sugar content. Growers with better sugar content were disappointed they did not receive higher prices. Given this season’s production challenges, Montana factories will likely complete slice campaigns in January (typically run until February).
Beet growers will need to closely manage expenses from inflationary headwinds. Production costs in nearly every farm category (except seed) have risen significantly with unpredictable price outlooks for fertilizer, transportation and energy expenses. Improvements in drought conditions will provide tailwinds for producers, easing irrigation concerns. Securing competitive contract prices will be vital to ensure beet grower profitability. Idaho producers were optimistic during recent grower meetings going into contract negotiations, with expectations of favorable contract prices. Force majeure and other processor challenges in Montana create headwinds for contract renewals or renegotiation. Volatile input prices will remain an ongoing challenge for beet growers and managing input costs will be crucial for 2023 profitability.