Pressure on sugar prices is "unlikely to fade" until at
least the last quarter of 2013, thanks to the boost to supplies offered by
surprisingly strong Brazilian production, the International Sugar Organization
The organisation raised by more than 2.3m tonnes, to 8.53m
tonnes, its forecast for the surplus in world sugar output in 2012-13.
"A higher crop in Brazil has boosted the surplus further,"
the ISO said, lifting by 2.2m tonnes, to 40.3m tonnes, its estimate for sugar
output in the top producing country.
The estimate for world production in 2012-13 was lifted by 2.81m
tonnes to a record 180.4m tonnes, in raw sugar terms, well ahead of consumption,
for which the forecast was raised by 470,000 tonnes to 171.8m tonnes.
The unexpectedly large Brazilian production, notably in the
key Centre South region, had been the "most influential" factor in the
continued decline in sugar prices, which last week hit a 30-month low, for a
spot contract, of 17.87 cents a pound on New York's Ice futures market.
"Dry weather in the closing months of Brazil's Centre South
harvest allowed production in the region to race ahead of market expectations,"
the ISO said.
And with a "rather low probability of a return to a deficit
phase in the next crop year", prices look unlikely to recover.
"It seems that the bearish pressure on world market prices
is unlikely to fade, at least before the end of the current season in September."
Competition for cane
The ISO's assessment of sugar price and production forecasts
comes despite an estimate of a 12% jump in 2013 to 23.9bn litres in Brazil's
output of ethanol, which competes for cane with sugar in the South American country.
Ethanol consumption in Brazil is seen rising by 10.4% to
Many commentators have raised growing competition between
sugar and ethanol for cane as a major support for prices of the sweetener,
after Brazil revealed it was to raise to 25%, from May 1, the level of ethanol its
blenders must mix into gasoline.
New York's March raw sugar contract stood down 1.6% at 18.06
cents a pound in late morning deals, with the better-trade May lot down 1.5% at
17.85 cents a pound.