Rabobank joined commentators foreseeing a world sugar
production deficit next season, but cautioned over expectations of a price
rally, given the stocks built up in a long spell of output surplus.
The bank, in its first estimates for 2014-15, starting in
September, forecast world sugar production to falling 900,000 tonnes behind
The forecast reflects an expectations that world sugar
production will fall, "albeit only slightly", for a second successive year, "suggesting
that low prices during the last couple of years may finally be generating a
The bank forecast lower output not just in Brazil's key
Centre South region, which has been hit by drought, but in India, the second biggest
producer, Thailand, the second-ranked exporter, and China.
Their declines will more than offset higher output forecast
for Australia, the European Union and Mexico.
However, Rabobank was cautious on the outlook for sugar
prices despite the prospect of a production deficit, highlighting the rebuild
in world inventories over the previous three seasons of output surplus.
"The projected deficit is currently very modest, and is not
enough to materially reduce the level of year-end global stock," the bank said.
"Nor does it look sufficient to significantly impact the global
"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."
Range of expectations
The forecast is the latest in a spree of estimates for the
world sugar balance sheet in 2014-15, although the range of expectations is so
Last week Platts Kingsman raised its estimate for a global
production shortfall to 2.09m tonnes, from 239,000 tonnes, however, the week
before ED&F Man raised its estimate for an output surplus by 400,000 tonnes
to 2.8m tonnes.
On Wednesday, Czarnikow forecast a world production deficit of
The commentators are broadly in agreement over prospects for
Brazil's Centre South, seeing output fall to roughly 33m tonnes from 34.3m
tonnes in 2013-14, on an April to March basis.
But India is emerging as a major source of doubts, in part
thanks to the differing interpretations of the impact of the weak start to the
Rabobank estimated Indian sugar output in 2014-15, starting
in October, at 26.2m tonnes raw value, in line with that last year.
Kingsman estimated output at 25m tonnes, on a tel quel basis,
with Czarnikow seeing it at 27.2m tonnes raw value.
"Although most sugar cane has already been planted, poor
rainfall will adversely impact yield and recovery levels for 2014-15, and it
will also reduce the water table available for irrigation for the next season,"