Macquarie interrupted the upward trend in estimates for world
sugar production by cautioning over the impact of cold weather on Chinese cane,
and downgrading its forecast for Thai output.
The bank cautioned that China's coldest winter in 20 years, which
state media say has frozen coastal waters trapping 1,000 ships in ice, "may
lead to some frost risk" in Guangxi, southern China, a key sugar producing region.
"China was forecast to have a bumper crop of around 14m
tonnes this season," Macquarie said.
And it cut by 300,000 tonnes to 9.2m tonnes its estimate of
sugar output in Thailand, the second-ranked exporting country, in 2012-13, representing
a 12% fall year on year.
The downgrades follow a series of increases to estimates for
the world sugar surplus, by the likes of Czarnikow and Kingsman, in 2012-13 and
upbeat hopes for next season's cane crop in Brazil, the top sugar producer,
Sugar and ethanol giant Cosan, and Brazilian consultancy Safras & Mercado, have this week
estimated the cane harvest in the country's key Centre South region in 2013-14
at 600m tonnes, a jump of some 13 year on year%.
"This week some extremely high forecasts were put forward by
Brazilian-based analysts for the Centre South," Macquarie analyst Kona Haque
While the bank's downgrade to Thai output represented a drop
of more than 1m tonnes in production the 2011-12 result, "we do not think this will
have a material enough bullish impact to offset what remains an otherwise oversupplied
world sugar market", she added.
Low sucrose levels
The comments on Thailand followed a field trip to the
country last month which identified depressed levels of sugar in cane.
"Despite the continuation of dry favourable crushing weather
since our visit, these yields do not seem to have picked up much," Ms Haque
said, citing an average of 83.6 kilogrammes of sugars per tonne of cane, down
from 93.4 kilogrammes last season.
The result may be down to widespread flowering, a process
which decreases sugar levels.
"We were told that flowered cane is fairly common in
Thailand, but it is likely to have impacted sucrose content," she said.