The worst may not yet be over for sugar traders
February 06, 2018 at 6:18 AM
The glut that’s plaguing the market this season will probably extend into 2018-19, with Green Pool Commodity Specialists forecasting a surplus of 5.4 million metric tons.
Production is expected to expand in India and Australia, and farmers in the European Union are set to plant another big crop. Supplies are growing outside Brazil and traders are turning their focus away from the world’s largest producer, according to the Brisbane, Australia-based researcher.
Traders meeting at the Dubai Sugar Conference this week will be looking at what the next season holds with prices down more than 30 percent over the past year. "In a big surplus year like this, there are many other producers taking the lead role," Tom McNeill, a director at the researcher, said by phone, citing India and the EU. "The magnitude of the Brazil center south crop as a determinant of where the market is going is diminished this year."
Another year of excess supplies follows a surplus of as much as 11.4 million tons this season, according to Green Pool, which revised its 2017-18 estimate upwards by almost 1.1 million tons.
While production will fall for the first time in five years, consumption is facing headwinds. Sugar output in India, the world’s second-largest producer, will jump 9.5 percent next season to 28.8 million tons, according to Green Pool. The forecast for the current season will probably be revised higher again. In the EU, production rose to 20.4 million tons as planted area expanded 18 percent due to the liberalization of the market. While planted area will probably decline 1.1 percent for next season, output is still seen strong at 19.5 million tons, the researcher said. Production in Australia will recover to 4.6 million tons. Good progress of current crops in the northern hemisphere means the glut could still get bigger in 2017-18, Green Pool said. While millers in Brazil will turn to making more ethanol in the 2018-19 season that starts there in April, that won’t be enough to offset production increases elsewhere. Sugar output in the center south, Brazil’s main growing region, will drop by 4 million tons to 32 million tons, the researcher estimates. Millers will direct 42.5 percent of their cane to making sugar, down from 46.6 percent. The rest will go to production of ethanol.
Other highlights of the report:
* Chinese output is forecast to rise to 10.9 million tons in 2018-19, from 10.3 million tons
* While a new sugar regime in Thailand makes it harder to forecast next season’s output, millers will probably probably produce 11.7 million tons, a slight decrease from this season’s 11.9 million tons
* Global consumption will grow 1.6 percent in 2018-19 and 1.4 percent this season, still below the long-term level of 2 percent
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
July 3, 2017
Green Pool highlighted the threat to sugar consumption from the likes of health concerns and rival sweeteners as it raised by 837,000 tonnes its forecast for the looming world sugar production surplus. The Australia-based sugar consultancy revised up to 5.55m tonnes its forecast for the global output surplus in 2017-18, taking it to the largest since 2013-14.Read More