Green Pool 'relatively pessimistic' on sugar market, seeing second world surplushttps://www.agrimoney.com/commodities/green-pool-relatively-pessimistic-on-sugar-market-seeing-second-world-surplus-51968
February 06, 2018 at 12:13 AM
Green Pool hinted at downbeat prospects for sugar prices as it raised its estimate for the production surplus for this season, forecast another stockbuild in 2018-19, and said a third one could be in the offing.
The Australian-based analysis group said it was “relatively pessimistic on our market outlook”, thanks to the boost to supplies from an 11.51m-tonne output surplus in 2017-18 – an upgrade of 1.9m tonnes from its previous figure – plus the prospect of a 5.3m-tonne surplus next season.
World stocks are poised to end 2018-19 at 94.5m tonnes, the highest for decades in absolute terms.
As compared with consumption - to form the stocks-to-use ratio viewed as an indicator of price potential - inventories will hit 51.1%, “the highest level on our records”, Green Pool said.
A further production surplus may follow still, in 2019-20, with Green Pool saying that “the more normal cycle in sugar is for a two-year deficit followed by a three-year surplus.
“So, this surplus cycle is only just starting to impact the market.”
The comments came at the start of the Dubai sugar conference, one of the highlights of the industry calendar, where other announcements on Sunday included an Al Khaleej Sugar Refinery deal to produce beet sugar in a deal signed with the Egyptian government.
The $1bn project is aimed at producing an extra 900,000 tonnes of sugar a year in Egpyt, and making the country self sufficient in the sweetener.
Brazil vs India
Green Pool’s estimate of a 5.43m-tonne world sugar production surplus in 2018-19 came despite an expectation of output easing by some 2.70m tonnes from this season’s record high, to 191.8m tonnes.
This is “mainly due to [a] sharp reduction in Centre South Brazil sugar output”, seen tumbling by 4.0m tonnes year on year to 32.0m tonnes, on ideas of a small drop in the cane crush, to 590m tonnes, coupled with a drop to 42.5% in the proportion of the crop turned into sugar rather than ethanol.
“A big switch into ethanol in 2018-19 should see sugar output fall sharply,” the analysis group said.
Indian output, by contrast, will rise by 2.5m tonnes to 28.8m tonnes, helped by “improved cane yields and sugar recoveries” in Uttar Pradesh.
‘Health concerns and taxes’
However, output will still remain well ahead of consumption, seen rising by 2.88m tonnes year on year to 184.9m tonnes.
“Sugar consumption growth is slow, and health concerns and taxes seem likely to keep it that way,” Green Pool said, forecasting a further season of contraction in Western European demand, although with African and Middle Eastern consumption growth by more than 2%.
On Friday, INTL FCStone raised by 800,000 tonnes to 3.6m tonnes its forecast for the world sugar production surplus in 2017-18.
For 2018-19, the brokerage forecast Brazilian Centre South output of 32.4m tonnes, on a cane harvest of 592.5m tonnes.
March 29, 2018
Green Pool signalled further weakness ahead of sugar prices, lifting its forecasts for the world production surpluses this season and in 2018-19, and heralding a further one in 2019-20.Read More
February 23, 2018
Global sugar prices have tumbled about 33 percent in the past year on a global surplus as production increases in Europe and India. ISMA last month raised its 2017-18 sugar output estimate 4 percent to 26.1 million tons, the highest in three years. Green Pool Commodity Specialists this week forecast Indian production at 28.1 million tons, with expectations of an equal or better crop next season.Read More
February 6, 2018
Green Pool hinted at downbeat prospects for sugar prices as it raised its estimate for the production surplus for this season, forecast another stockbuild in 2018-19, and said a third one could be in the offing.Read More
January 3, 2018
March raw sugar settled down 0.02 cent, or 0.13 percent, at 15.31 cents per lb after peaking at 15.37 cents, its highest since Nov. 28. But focus on bearish fundamentals returned after closely-watched commodity analyst Green Pool on Wednesday raised its projections of a global surplus in 2017/18 to 10.43 million tonnes, up from a forecast of 9.8 million. [nL8N1OY1Q7Read More
January 3, 2018
Green Pool hinted at the potential for sugar price weakness as it lifted to a 15-year high its forecast for the extent of supplies of the sweetener, citing strong production prospects in the likes of India and Thailand. The Australian-based analysis group raised by 629,000 tonnes to 10.43m tonnes its forecast for the world sugar production surplus in 2017-18 - while reducing by 664,000 tonnes to 1.11m tonnes its estimate for the output shortfall last season.Read More
November 2, 2017
The global sugar market is poised for a surplus of 9.80 million tonnes 2017/18, Australia-based analyst Green Pool said on Tuesday, amid stronger production and sluggish consumption growth.Read More
November 1, 2017
World sugar dynamics are the “worst” - for bulls – in at least 12 years, Green Pool said, hiking its estimate of the global output surplus, and hinting at the potential for further growth in stocks “into 2018-19 and perhaps beyond”.Read More
August 24, 2017
The global sugar surplus is expanding as Brazil, Thailand and the European Union drive world production to record, according to Green Pool Commodity Specialists. Supplies will outpace demand by 7.1 million metric tons in the 2017-18 season that starts in October in most countries, a 29 percent increase from a May forecast.Read More