[BANGKOK] The sugar market is set to turn bullish as four years of declining prices curb production, worsening shortages through 2017-2018, said commodity trader Group Sopex.
World output will expand 1.8 per cent to 183.2 million metric tons in three years, while demand will grow 7.9 per cent to 194.7 million tons, widening the gap to 11.5 million tons, said analyst John Stansfield, who has studied sugar for two decades. He expects a deficit of about 700,000 tons this season, the first since 2010-2011.
Futures slumped to a four-year low last month after global reserves climbed to a record. The trend may be turning, with Kingsman SA and Green Pool Commodity Specialists Pty also forecasting shortages next year. Morgan Stanley and Rabobank International predict prices will increase on reduced planting and higher ethanol output in Brazil, the top sugar supplier.
"We definitely appear to have found the bottom of the market," said Mr Stansfield, a former analyst at Vitol Services Ltd and Olam International Ltd. "We expect the market will be bullish in the next three to four months," he said in an interview in Bangkok on Wednesday.
Feb 15, 2015