Rabobank Sees Global Sugar Surplus Building for Third Season
Global sugar supplies will outpace demand in the season that starts in October in most countries, a third consecutive surplus, according to Rabobank International.
Production will be 4.6 million metric tons higher than consumption in 2012-13, the bank estimated in a monthly report e-mailed today. That would follow surpluses of 8.1 million tons in the current season and 1.7 million tons in 2010-11. Increased supplies are likely to result in lower prices, said the bank, which cut its price forecast for raw sugar in New York for the second quarter to 21.3 cents from 22 cents in an April estimate.
“The fundamental outlook calls for further price downside to encourage demand to absorb the current and new season surplus,” wrote Keith Flury, an analyst at the bank in London.
Global output will fall 0.9 percent in 2012-13 to 177.6 million tons, while consumption is forecast to rise by 1.5 percent to 169.5 million tons, according to the report. Sugar consumption has been helped by lower prices, the bank said. The commodity fell 27 percent last year, the most in a decade.
A falling Brazilian real alongside a lower Indian rupee have “insulated the origins from the falling New York futures prices and lowered support levels,” Flury said. Brazil is the world’s largest sugar producer followed by India.
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