THE WORLD SUGAR MARKET

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00429A000600010005-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 16, 2016
• Document Release Date: January 13, 2005
• Sequence Number: 5
• Content Type: MEMO

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OCI 'No. 1554/63
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
22 May 1963
CURRENT INTELLIGENCE MEMORANDUM
SUBJECT.- The World Sugar Market
1. The current world sugar price of almost 11
cents per pound is more than three times the level
of a year ago and the highest in 40 years. Most of
this increase has taken place within the last six
months. It is believed that the rise is attributable
to a tight supply situation rather than to Soviet
manipulation of the market.
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The World Sugar Situation
20 World sugar consumption is expected to ex-
ceed total production by about 3 million tons in
1962-63, the first year in which this has occurred
since 1956-57, It has been increasing about four
percent per year--2 million to 3 million tons an-
nually, Production, on the other hand, was about
51 million metric tons in both 1961-62 and 1962-
63, around 4 million tons below the peak level
achieved in 1960-61. At the beginning of the 1962-
63 season, carry-over stocks of sugar in 47 coun-
tries which normally account for about 75 percent
of total production (including Cuba, but excluding
other bloc countries) were about 19 percent--al-
most 2 million tons-below those of a year earlier.
Cuban stocks had been practically liquidated, and
free world stocks were declining. Inventories in
the USSR, on the other hand, were unusually high,
3. A number of factors had an adverse effect
on world sugar production during the 1961-62 and
1962-63 seasons, Many countries, particularly in
Latin America, had lowered their sugar production
targets following the 1960-61 season because of
burdensome stocks, Also, unfavorable weather in
Europe for two consecutive years reduced yields of
sugar beets.
4o Cuban sugar production in 1962-63 is ex-
pected to be about 4 million tons, substantially
less than the relatively poor crop of 4,8 million
tons in 1961-620 The European beet crop which will
be harvested this fall is the first source which
could raise supplies substantially to meet increased
demand. However, indications are that European
sugar-beet plantings this spring are up only three
percent above last year, far below earlier expecta-
tions. A very late spring in Europe was a major
factor holding down the increase in plantings, and
the lateness of the season also dimmed early pros-
pects for the yields this year. This factor to-
gether with the Haitian-Dominican Republic unrest
and an announcement by the US Department of Agri-
culture on 6 May that it had increased the US sugar
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marketing quota by 600,000 tons have all contributed
to recent advances in the world price of sugar.
5. Although there are no firm data available
on the amount of surplus sugar currently held by the
USSR, a reasonable estimate can be made. Soviet
stocks of sugar as of 1 January 1963 are estimated
to have been about 4 million to 4.5 million metric
tons (refined value). The size of Soviet stocks be-
fore the build-up in recent years suggests that a
level of about 2.5 million to 3 million metric tons
is normal. Thus, it appears that the Soviet Union
probably now has about 1 million to 2 million tons
of sugar which could be sold on the world market.
6. The failure of the Soviet Union to enter
the market with its surplus stocks of sugar could
be,considered "manipulation," if the decision to
withhold sales has been made deliberately in order
to force up the price. Although it is entirely pos-
sible and logical that the USSR may attempt to in-
crease its sales to the free world (either directly
or by indirect transaction through other bloc ex-
porters such as Poland and Czechoslovakia) in order
to take advantage of the current high prices on the
world market, we have no evidence that the Soviet
Union contemplates sales of a large quantity of its
surplus sugar.
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portion, and perhaps a large portion, of the Cu an
sugar that will be exported to the free world market
was contracted for in late 1962 before the largest
price increases had occurred. Furthermore, available
evidence indicates that the Communist bloc is not
willing to increase its buying price for Cuban sugar
and will continue to pay only 4 cents per pound,
Finally, Cuba will have considerably less sugar to
sell, not only because of lower production in 1963
but also because reserve stocks still available in
1962 have now been exhausted.
90 If present estimated Cuban contracts with
the West are honored, sugar exports to the free
world in 1963 will total $120 million to $150 mil-
lion, Total sales to the bloc should range between
$200 million to $230 million, depending upon the
'amount of sugar Cuba finally is able to produce and
upon the minimum level of exports at 4 cents per
pound-which the Cubans are required to maintain.
(This level is not known.) Thus Cuba?s total ex-
ports of sugar in 1963 will probably range between
$320 million and $380 million in contrast to an
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estimated $430 million during 1962, in spite of the
present high world price. However, if the USSR
should either permit greater Cuban sales to the free
world or pay the Cubans a price above 4 cents--the
former is more likely--the Cuban position could be
substantially improved.
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