Green Pool Sees Biggest Ever Sugar Surplus on Indian Outputhttps://www.bloomberg.com/news/articles/2018-05-03/green-pool-forecasts-biggest-ever-sugar-surplus-on-indian-output
May 03, 2018 at 1:10 AM
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.
Biggest Surplus Ever
To make matters worse, excess supplies forecast for next season will also be bigger than previously expected, according to Green Pool. That could drive further declines in the price of sugar, which is trading near the lowest since 2015 and is this year’s worst-performing major commodity.
"We are really just plowing our way through that 2017-18 surplus and I think the reality is there is a further surplus to come to the market," Tom McNeill, a director at Green Pool, said by phone. "The reality of Indian exports hasn’t yet hit the market. There’s still a lot of sugar to come out of Thailand this year, a lot. Pakistan is still exporting."
India accounts for the majority of this season’s surplus, which Green Pool calculates on a national crop-year basis, starting when harvesting begins in each country. The Asian country’s output is now forecast to reach 31.1 million tons, about 5 percent higher than previously expected.
A bigger Indian harvest next season will also contribute to another surplus. Green Pool raised its forecast for the 2018-19 glut by 10 percent to 6.6 million tons. The crop in India will be so big that it will overtake output in Brazil’s main growing region, which is diverting more cane to making more profitable ethanol.
India’s sugar production will probably reach 32 million tons next season, while millers in Brazil’s center south will make 30.8 million tons, the researcher forecasts. Ethanol prices have been climbing and Brazil has recently turned to more-friendly policies towards the biofuel.
"There’s no doubt that Brazil is the only real shock-absorber in the market, hence why they are moving back out of sugar and into ethanol," McNeill said.
Sugar’s slump is hurting many producers because prices are below the cost of production, McNeill said. Still, global output may take longer to adjust due to policies in many countries that protect prices farmers receive for sugar cane.
"Prices are far below the cost of production for most of the global exporters, so there’s damage being done by those prices without a doubt," he said.
August 30, 2018
Green Pool, highlighting India’s soaring sugar supplies, cautioned over the potential for prices of the sweetener to remain “low-ish”, even as it cut its forecast for output in many other producing countries.Read More
August 12, 2018
Changing consumer tastes raises the possibility of a long-term reduction in demand even as the world’s largest producers are notching record production. Green Pool Commodity Specialists, a consultancy, projects a 19 million-ton surplus this year, the largest ever.Read More
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