Small Global Deficit in 2014/15 to End Four Years of SurplusIndia: The Indian government has extended the subsidy of INR
3.33/kilograms ($54/ton) for exports of up to 4 million tons of raw
sugar over the next two years until September 2014, at the same time
increasing import duty on sugar from 15 percent to 40 percent.
Sentiments and price outlook for Indian sugar seem to be marginally
positive in the short run.
Indonesia: Sugar production levels are expected to remain close
to 2.6 million tons, with no significant increase in production area
for 2014/15. The glut of sugar stocks has kept domestic prices
hovering slightly above or right at the price floor and with the
government expected to once again issue import licenses to refiners
during an election year, a further 3.2 million tons of sugar may
supplement the glut.
Thailand: El NiÑo events threaten to hamper replanting efforts
and final production numbers could be closer to 10.5 million tons,
rather than 12 million tons. Thailand’s current political instability
also threatens the traditional labor force.
China: China’s 2013/14 season saw a drastic fall in sugar beet
production, with only a marginal increase in cane production. The
result was a 3 percent year over year drop to 14.3 million tons raw
value of sugar produced. 2014/2015 expected tonnage will be less
still, at 13.4 million tons.
Brazil: The Brazilian Centre/South cane harvest continues at
full steam. Dry weather in the past months allowed mills to work at
full capacity, and accumulated cane crushing rose 3.7 percent above
the previous season. Crop potential may be hindered by dry weather.
EU: The EU’s downward price trend dropped a further 22 percent
over the last 15 months as comfortable supply has effected domestic
price. In most cases, EU sugar producers have seen profit margins
decrease in contrast with previous years.
U.S.: The USDA’s sugar production prospects for 2014/15
indicate that production will decline for the second year in a row.
However, Rabobank predicts potential for volume to increase as
expected prices could incent more production.
Mexico: Strong exports continue with total exports reaching 2.5
million tons, an increase from the last cycle of 2.2 million tons.
Under the current US lawsuit against Mexico sugar exports, Rabobank
expects exports to the US to shrink, while exports to the rest of the
world may continue at current levels.
Australia: Outlooks suggest, at least, a 70 percent chance of
an El NiÑo event around September 2014, typically bringing
drier-than-average conditions and continuing the favorable conditions
witnessed in the first half of the season. Depending on the intensity
and duration of an El NiÑo event, Australian cane and sugar production
could be boosted on an aggregate basis.
NEW YORK--(BUSINESS WIRE)--
Rabobank has published a new report on the global sugar industry,
looking at issues of supply, demand and pricing in key markets
worldwide, particularly the factors resulting in an end to a global
In the report, Rabobank’s Food & Agribusiness Research team says that
the global sugar market has been trading sideways in the past three
months, as prices have been confined in a range between $16.5/lb and
$18.5/lb. Brazil continues to send conflicting signals to the sugar
market: while initial cane production estimates of 570 million tons and
32.8 million tons of sugar remain for the region, this is subject to
revisions, depending on how the weather progresses in the coming months
after a long dry period.
The bank says that world production overall is expected to decrease
slightly for the second year in a row, suggesting that low prices during
the last couple of years may finally be generating a response.
Preliminary global production estimates for the 2014/15
(October/September) global balance suggest a projected deficit of 0.9
million tons raw value.
“Despite a return to a global deficit for the first time in four years,
the projected deficit is currently very modest, and is not enough to
materially reduce the level of year-end global stocks,” stated Rabobank
analyst Andy Duff. “Nor does it look sufficient to significantly impact
the global stocks/consumption ratio. For this reason, our preliminary
balance for 2014/15 suggests only limited additional support for prices
from fundamentals as we move from the current international crop year to
a new one.”
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Rabobank Group is a global financial services leader providing wholesale
and retail banking, leasing, real estate services, and renewable energy
project financing. Founded over a century ago, Rabobank is one of the
largest and safest banks in the world, with nearly $1 trillion in assets
and operations in 45 countries. In North America, Rabobank is a premier
bank to the food, beverage and agribusiness industry. Rabobank’s Food &
Agribusiness Research and Advisory team is comprised of more than 80
analysts around the world who provide expert analysis, insight and
counsel to Rabobank clients about trends, issues and developments in all
sectors of agriculture.
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Lynne Burns, 212-808-2581
Sarah Kolell, 816-516-7984
Jessup Wiley, 559-447-7946
Source: Rabobank Group