Sugar Low: Commodity Plummets on Surplushttps://blogs.wsj.com/moneybeat/2018/05/01/sugar-low-commodity-plummets-on-surplus/
May 02, 2018 at 4:42 AM
For sugar, there’s no sweet ending in sight after a long period of declining prices.
And analysts forecast another surplus next season, which begins in October, suggesting a recovery in sugar prices is a long way off.
“Pretty much every bit of news coming out right now is bearish,” said Nick Penney a senior trader at Sucden Financial Limited.
As the current season wears on, consultancies and trade bodies have been raising their production forecasts.
Australia-based consultancy Green Pool recently upped its surplus estimate by 43% to almost 15 million tons. The International Sugar Organization, the global trade body, sees a surplus of 5.2 million tons.
The last growing season, from 2016 to 2017, recorded a 2.5 million ton deficit.
But now, a bunch of big sugar growers are opening the floodgates.
In particular, production in India—the world’s second-largest producer—has piled pressure on prices. The Indian government is expected to create subsidies to encourage sugar exports for the first time since late 2013.
The European Union has lifted export quotas that had previously kept a lid on sugar coming out of the bloc, the third largest global producer. Thailand is also adding to the pile with its own big sugar haul. European and Thai supply are forecast to have increased 21% and 22% respectively in the 2017/18 season, according to the ISO.
Brazil, the world’s largest producer, may produce less sugar than it did in its record season last year, but that reduction will “barely leave a dent” in the global excess, said John Stansfield, an analyst at sugar trading house Group Sopex.
The excess supply comes despite resilient demand.
Even as the U.K. and other places introduce sugar taxes, global consumption is set to grow 1.6% in 2017/18, in-line with the five-year average, the ISO said.
The Far East and Oceania region accounts for the largest proportion of consumption and is the region with the second fastest growth, behind Equatorial and Southern Africa.
The falling price of sugar is taking its toll on the companies that trade it.
In one example, ED&F Man Holdings recently confirmed the departure of the managing director of its sugar division, amid a wider restructuring.
“I don’t see any relief for the market next season and if you look at the sugar trading outlook and the number of trading houses in the market, they’re competing more aggressively for that market,”said Warren Patterson, strategist at ING.
July 9, 2018
Surging ethanol stockpiles and tumbling prices for the biofuel risk bringing back more sugar production in top grower Brazil. “Prices have been coming down, ethanol stocks are building. Demand is strong but is probably not sufficient to clear the stocks,” said Tom McNeill, a director at Brisbane, Australia-based researcher Green Pool Commodity Specialists. “I think this assumption that everyone has made that maximum ethanol is absolutely locked in could be challenged within the next three months.”Read More
May 4, 2018
July raw sugar settled down 0.06 cent, or 0.5 percent, at 11.69 cents per lb. Focus remained on a global supply glut, with commodity analyst Green Pool forecasting a combined sugar surplus of almost 25 million tonnes for the 2017-18 and 2018-19 seasons.Read More
May 3, 2018
The world’s sugar traders are experiencing the biggest ever global surplus. That’s according to Green Pool Commodity Specialists, which expects the glut to reach 18.4 million metric tons this season. The Brisbane, Australia-based researcher boosted its estimate by almost a quarter because of a massive increase in the sugar-cane area and yields in India, the No. 2 producer.Read More
May 2, 2018
For sugar, there’s no sweet ending in sight after a long period of declining prices. Australia-based consultancy Green Pool recently upped its surplus estimate by 43% to almost 15 million tons. The International Sugar Organization, the global trade body, sees a surplus of 5.2 million tons.Read More
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