Sugar analyst Green Pool only slightly trimmed its forecast
for a hefty sugar surplus next season, as consumption grows only sluggishly
despite easing sugar prices.
"Consumption is a major issue for sugar, with global
consumption growing only slowly," Green Pool said.
"Some growth is being seen in developing countries, while
consumption is actually falling in some developed countries."
Green Pool forecast the global 2017-18 sugar balance to show
a surplus of 4.779m tonnes, down slightly from the 4.716m tonnes surplus
forecast last month.
Greenpool trimmed its forecast for the 2016-17 sugar
deficit, to 928,000 tonnes, citing increased better-than-expected Indian
production, and reduced consumption there in response to high prices.
While production is seen growing by nearly 7% next season,
to 188.11m tonnes, consumption is seen rising by about 1.5% over the same
Still, Green Pool noted that even this low rate of increase
was above the ten-year average, and "picking up slightly from the slump in
sugar consumption over the past two years".
The surplus would grow global sugar stocks to 79.69m tonnes.
"Given this, it is not surprising that global sugar prices have
fallen back," Green Pool said.
Uncertainty over hurricane
The analyst downplayed the damage caused by the recent
cyclone across Australia's sugar belt, trimming expectations to 4.60m tonnes, although
it warned that the extent of the loss would be hard to estimate until harvest
starts next month.
"This is because a lot of sugarcane was knocked over and flooded,
and this type of damage is almost impossible to assess until the harvest is underway,"
Green Pool said.
Green Pool noted that the result of the storm was "a complicated
equation," given that areas where the cane was undamaged would have benefited
from the accompanying rains.
But Green Pool noted that various national forecasters have
the possibility of an El Nino event, which would hurt prospects for the Asian
crop next year, at between 40 and 70% likely.
The analyst warned that "with global sugar stocks at
relatively low levels, this development needs to be monitored closely".
Green Pool forecast centre south Brazilian sugar production
at 35.5m tonnes next season, 300,000 tonnes higher than its previous forecast,
as it cut its forecast for ethanol production.
In comparison the Brazilian crop supply agency Conab, sees centre
south sugar output at 35.46m tonnes.
Thai sugar production was seen growing to 11.0m tonnes next
season, up from a 10.03m tonne harvest this year that was itself better than
many expected "even a few months ago".
Green Pool maintained its forecast for a 20% increase in
beet sugar production in the EU following this year's deregulation of the sugar
industry, at 18.3m tonnes.
And the analyst warned that a drop in EU sugar prices would
be unlikely to boost consumption, given that deregulation will also increase
competition from grain-based isoglucose.