Obviously, sugar is one of major commodities traded in the global market. This product is made from sugar beet and sugarcane.
Brazil is the world’s biggest sugar producer. Then come India, China and Thailand. Over the last few years, sugar has seen difficulty competing with various sweeteners. Obviously, this factor affects sugar prices around the globe.
Sugar is another weather-dependent market. When you trade sugar, it is vital to monitor the current situation in Brazils’ sugar industry in order to see the real state of affairs in the global market of sugar and to evaluate its near-term prospects.
What awaits the global market of sugar in the near future? How will sugar prices behave? Let’s ponder on this question together with .
Sugar Market: Current Situation and Near-Term Prospects
According to the Commodity Trading Department of , the ISO’s sugar report published in March shows the following changes:
1. Central-South Brazil, the country’s leading sugar-producing region, showed an 8% production increase (y/y) up to 532.2 million metric tons during the reporting period.
The overall sugar production increased by 9% (y/y) up to 34 million metric tons. The North-East of Brazil, the second biggest sugar-producing region, is nearing the final stage of the current harvesting season. The sugarcane production in the region is expected to reach 48.6 million metric tons. This is a 7% decline (y/y).
The total export volume reached 24.85 million tons during the reporting period (April 102 – March 2013).
Thailand, the world’s second biggest sugar producer and exporter, increased its sugarcane production by 7% (y/y) up to 76 million metric tons (as of March 3rd). The sugar production declined by 6% down to 7.5 million metric tons because of a decline in the amount of saccharose in sugarcane.
India produced 18.8 million tons of sugar after refining 190 million tons of sugarcane (as of late February). This is a decline by 60 000 tons of sugar (y/y).
At the same time, China increased its sugar production by 8% up to 9.16 million tons.
Therefore, the ISO has revised its forecast for the global production of sugar. They expect it to reach 180.3 million metric tons this agricultural year – October 2012- September 2013. This is expected to be a new world record.
At the same time, they expect the global consumption of sugar to reach 171.8 million tons (+2%) during the same period.
Sugar exports are expected to see almost no changes (53,893 vs 54,034 million tons). Sugar imports are expected to drop from 53 million down to 50.7.
The revised report implies higher global sugar stocks – an increase by 5,363 million tons.
The surplus is expected to keep pressing sugar prices in the near future.
Experts On Sugar Market Prospects
According to the Commodity trading Department of , sugar prices are very unlikely to exceed level 20 in the near future. Higher demand for ethanol and physical purchases of sugar may support the market. On the other hand, the price has already taken into account excessive sugar stocks. Therefore, any positive information may have a major impact on the market.
