Czarnikow highlighted surprising strength in world sugar output,
even as it forecast a production deficit in 2014-15, in the latest of a
rather disparate set of estimates major commentators on global supply and demand.
The sugar merchant, in its first estimates for next season,
forecast that world growth in consumption of the sweetener will rise by 2.1% to
183.8m tonnes, raw value.
Coupled with 1.0m tonnes of loss down to "unrecorded
disappearance", demand will outpace global production by 500,000 tonnes in
2014-15 - returning the market to deficit after four seasons of surplus.
However, given the weakness in prices, which "languish below
cost", the world might be expected to be on for a bigger shortfall, Czarnikow
'Can't go on for ever'
"Despite low prices, pressure on farmer incomes and
destruction of producer returns, we are yet to see the large response in
worldwide production which might be expected," the London-based merchant said.
In fact, production was termed "strong" by Stephen Geldart, Czarnikow
"This reflects the support that many industries have
received and the degree to which loss-making producers can continue to operate
as long as variable costs are covered," he said.
"But this cannot continue indefinitely," he added.
Production will show significant growth in Thailand, the
second-ranked sugar exporting country, where returns from cane remain above
those from cassava and rise, and output of the sweetener will rise 700,000
tonnes to a record 12.8m tonnes, raw value.
In the European Union, output will rise nearly 5% to 17.7m
tonnes, boosted by a battle among producers for market share as the removal of
quotas looms, and helping drive world beet sugar output 1.2m tonnes higher to
The important Brazilian Centre South cane harvest was seen
falling to 561m-578m tonnes in the current crushing season, from 596m tonnes last
time - sufficient for sugar output of 32.6m-33.2m tonnes, down from 34.3m
Czarnikow added, that in the Centre South, responsible for
some 90% of cane output, "sugar and ethanol returns have not been sufficient to
meet operating costs and mills have reduced expenditure, particularly on cane
plantings and field maintenance.
"Investment in the fields is low and weather conditions have
Range of forecasts
The merchant's forecast for the 2014-15 sugar balance sheet
is the latest in a series, with analysis group Platts Kingsman earlier this
week raising its estimate for a production deficit to 2.094m tonnes, from
The Swiss-based group cited the threat of a "sudden death"
to the Centre South cane harvest, as viable crop runs out.
However, ED&F Man last week forecast a production surplus
of 2.8m tonnes, an upgrade of 400,000 tonnes from its previous forecast.
The Czarnikow estimates also factored in a rise of 1.9m
tonnes to 27.9m tonnes in output in India, the second biggest producing
country, in 2014-15, reflecting the replanting of fallow land in Maharashtra.
Indian output will exceed consumption by 700,000 tonnes.
In China, a key importing country, production will fall
600,000 tonnes to 13.2m tonnes, after farmers crushed seed cane last season, in
expectation of weak prices ahead.