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
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