Green Pool lifts bar on hopes for world sugar surplus

http://www.agrimoney.com/news/green-pool-lifts-bar-on-hopes-for-world-sugar-surplus--7915.html

January 28, 2015 at 10:28 AM

While Brazil's coffee production, at 45.3m bags, fell last year well below early market expectations of a harvest of up to 60m bags, cane and sugar output proved less disappointing.

Cane is "able to survive relatively harsh conditions at times, and recover well from them", Green Pool said, citing an estimate of sugar production in Brazil's key Centre South region reaching 32m tonnes last year, not far short of initial hopes.

"The Centre South Brazil 'coffee panic', which quickly spread to sugar, was overdone," Green Pool said.

'Distorted market signals'

The comments came as the group, for a third time, upgraded its forecast for the world sugar production surplus in 2014-15, by 360,000 tonnes to 1.73m tonnes.

The revision reflected a raised estimate for output, upgraded by 1.22m tonnes to 181.6m tonnes, back by a series of small boosts to country production figures, most notably for Ukraine.

"Beet and cane crops improved during what turned out to be a relatively neutral weather year for crops globally," Green Pool said.

Output was also supported in part by continued trade barriers and protectionism evident, for example, in the maintenance of prices in countries such as China and Russia at levels "well above" global levels.

"So it was in 2014 that producers failed to receive the strong market signal to cut back cane or beet crops, because their governments distorted the market signals to producers."

Upbeat estimate

Green Pool's updated forecast for the world sugar balance sheet for 2014-15 is more generous than most estimates from rival commentators.

Czarnikow last month forecast a 0.6m-tonne surplus, and Australia's Abares commodities bureau a 0.2m-tonne surplus, while the US Department of Agriculture foresees a 1.4m-tonne deficit, and the Datagro a shortfall of nearly 2.1m tonnes.

However, caution must observed in comparing figures too closely, given methodological changes, with some observers sticking to strict crop years, typically on an October-to-September basis, and others using a cocktail of local seasons.

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