RSS
Twitter
Linked In
News In
News
Linked In
RSS
https://twitter.com/Agrimoney
http://www.newsnow.co.uk/h/Industry+Sectors/Agriculture

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Abares downbeat on sugar price despite supply cut

Twitter Linkedin

Australian officials cut expectations for world sugar production in 2014-15, but not by enough to follow other observers and foresee an output deficit – leading to a downbeat price forecast.

The Abares crop bureau cut by 2.8m tonnes to 179.9m tonnes its forecast for world sugar output in 2014-15, starting in October, ditching expectations of a small rise in production.

The downgrade reflected in the main a cut to 38.0m tonnes in the estimate for Brazilian output, i a 1.7m tonne drop year on year, according to the bureau, which had it its last forecasts, in March, forecast a rise in volumes in the top producing country.

"The forecast fall largely reflects assumed lower sugar yields as a drought of in Brazil's Centre South region," Abares said in a report.

Sugar vs ethanol

Its forecast also assumed a small drop of 1 point to 44%, in the proportion of Brazilian cane turned into sugar rather than ethanol, with the biofuel in its anhydrous form favoured by government proposals to lift by 2.5 points to 27.5% its blend rate into gasoline from the start of next month, the briefing said.

However, the estimated tipping point between ethanol and sugar production from cane does vary from commentator, and indeed will alter between mills, depending on factors such as their marketing regimes and cane harvesting strategy.

Brazilian institute Cepea in fact estimates that last week, making crystal sugar (a domestically-popular type between raw and white grades) "remunerated 25% more than anhydrous ethanol" in São Paulo, the top cane-growing state.

China, Thai downgrades

Abares also scrapped forecasts for a rise in output in Thailand, the second-ranked sugar exporting country, where production was seen falling some 700,000 tonnes to 10.9m tonnes, reflecting a "5% fall in cane planting in response to forecast lower world sugar prices".

And for China, a major importer, the bureau also ditched ideas of a rise in production, seeing output down some 4% at 14m tonnes, "in response to lower Chinese domestic sugar prices and assumed lower sugar yields.

"Chinese farmers are expected to move from cane and sugar beet production to alternative crops, such as cassava, vegetables and rice, because of expected better returns."

Higher hopes

However, Abares stood by expectations of growing sugar output in Mexico and the US, and raised its estimate for domestic production by 57,000 tonnes to 4.60m tonnes.

This upgraded forecast, representing an increase in output of 220,000 tonnes year on year, was down to ideas of a 1.6% rise in harvested area and a recovery in yield from levels hurt in 2013-14 by flooding.

In fact, Australian cane growers should see a rise of 7% to $38 a tonne in returns, assuming an improved yield, Abares said.

Surplus vs deficit

The revisions left world production above consumption in 2014-15 on Abares forecasts, enough to fuel a 400,000-tonne increase to 80.5m tonnes in world stocks at the close of 2014-15.

While lower than the surplus of 2.2m tonnes the bureau had previously foreseen, it is more upbeat than expectations from many other observers, such as Platts Kingsman, which last month forecast a 239,000 deficit in 2014-15, on an October-to-September basis.

The International Sugar Organization foresees "neatly balanced global supply and demand".

Price outlook

On prices, Abares raised its outlook for average benchmark New York futures in 2014-15 by 0.8 cents pound to 16.0 cents a pound, although this remained below the price that investors are factoring in.

Many other commentators also have far higher price expectations, with Societe Generale, for instance, foreseeing raw sugar futures averaging 18.6 cents a pound this year and 18.3 cents a pound in calendar 2015.

Raw sugar futures for October 2014 delivery were on Tuesday trading at 17.93 cent a pound, with prices rising to 19.16 cents a pound for the October 2015 contract.

Abares said that its forecast price would represent "the lowest in even years, but remain well above the average of 11 cents a pound for the 10 years to 2007-08".

By Agrimoney.com

Twitter Linkedin
Related Stories

Soft commodities better bets than grains for 2018, says Commerzbank

Indeed, investors are overrating prospects for corn and wheat futures. But cocoa futures have scope for gains, and coffee could see a "price surge"

Evening markets: Brazilian travails send coffee, soybean and sugar futures lower

... while Canada’s crop upgrade sends wheat to a fresh contract low. But cotton spares blushes for ag bull, hitting a seven-month high

UN sees 'cereals boom' as it ditches idea of tighter world grain supplies

The all-important stocks-to-use ratio for world cereals will not fall after all in 2017-18, the UN FAO says, reporting an easing in food prices

Evening markets: Soybean futures reverse - despite soymeal resilience

Soybean futures lose bouyancy, although fare better than wheat, which sets fresh contract lows. Sugar tumbles even faster
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

© Agrimoney.com 2017

Agrimoney.com and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069