Sugar Market Overview

Futures news, sugar. For the last twenty years since the collapse of the USSR Russia and CIS countries have been major importers of sugar and received special attention of global market. In 2011/12 the situation changed drastically due to high yield in Russia, Belarus, and Ukraine. In 2009 the level of self-provision with sugar of the Customs Union of Belarus, Kazakhstan, and Russia rose drastically, having cut import to 90 percent.

The plans of Russian government include raising the potential of sugar industry, as well as raising sugar production to 5.4 mln. tons in the nearest future. The same can be stated about the plans of Belarus, Ukraine, and Kazakhstan. Production growth in Belarus is expected to amount to 720 ths. tons, in Kazakhstan – to 45 ths. tons. The countries of the Customs Union are expected to produce about 6.265 mln. tons, with demand amounting to 6.6 mln. tons, and import demand reducing to 345 ths. tons.

India mostly exports sugar to the Middle East and African countries from the ports on western and southern coast. The total export in 2011-12 is expected to amount to 3.5 – 4.0 mln. tons. Indian ports can provide the shipment of 400 000 tons monthly, but such capacity may drop twice during the period of monsoon rains in June-September. Monsoons have already reached the territory of the largest production state Maharashtra, and rainfall will rise in the nearest future, making the production technology of sugar harder.

Downpours in central and southern Brazil reduce the growing pace of sugar cane and make its transportation from fields to plants harder. They also result in smaller sugar content in the yield. However, technologists claim that, despite this, rains create favourable conditions for sugar cane growth during the second half of the season, thus raising yield capacity and sugar production in the country.

Taking into consideration the abovementioned, it gets clear why prices have drastically risen from 18.96 to 20.30 in the course of last five market days. However, the volume of global production that is expected to amount to 167.4 mln. tons by the end of the season, which ends on September 30 presupposes global surplus that will cast pressure on the market, thus starting bearish trend.