December 18, 2014
Bloomberg
By Morgane Lapeyre
Sugar demand rising by about 2 percent will help reduce the global glut as output remains little changed from last season, according to Czarnikow Group Ltd.
Global sugar production will exceed demand by 600,000 metric tons in 2014-15, following a surplus of 4.4 million tons in 2013-14, the London-based trading company said in a report today. World consumption is expected to climb 2.1 percent to 182.5 million tons in 2015, while output will be little changed at 184 million tons, it said.
“Two percent annual growth adds roughly 3.5 million metric tons raw value to consumption each year,” Ana Carolina Ferraz, analysis manager at Czarnikow, said in the report. “This helps to reduce the scale of the surplus each season. The market remains well supplied” after about 21 million tons were added to inventories in the past three seasons, she said.
Raw sugar prices in New York dropped almost 60 percent from a 30-year high of 36.08 cents a pound reached in February 2011 as world supplies outpaced demand. Futures traded at 14.89 cents on ICE Futures U.S. today, after yesterday touching the lowest for a most-active contract since June 2010.
Output in the center south of Brazil, the world’s biggest grower, will be 31.9 million tons as agricultural yields were better than expected after a drought hurt production, according to Czarnikow. Dryness also raised sucrose levels in the cane, limiting the shift towards more ethanol production this year.
Production in Thailand, the second-biggest exporter of the sweetener, will be 11.1 million tons, down from 12 million tons in 2013-14, Czarnikow said. Supplies from China are also expected to decline by 13 percent to 12.6 million tons, it said.
Czarnikow forecasts Indian sugar production at 29 million tons, about an 8 percent increase on 2013-14. Output in the European Union will be 19 million tons, “one of the largest EU crops in recent history,” and 11 percent higher than last season, it said.