The global sugar surplus for the 2012-13 season started Oct. 1 will be 38 percent bigger than estimated in November partly because of more supplies from top grower Brazil, the International Sugar Organization said.
Sugar production will be 8.5 million metric tons higher than consumption, up from a previous estimate of 6.2 million tons, the London-based organization said in a report e-mailed today. Global production will climb to a record 180.4 million tons, while consumption will total 171.8 million tons, the ISO said. That compares with output at 174.8 million tons in 2011-12 and usage at 168.4 million tons, according to the report.
“In contrast to the previous year when global production rose despite a significant decrease in sugar output in Brazil, in 2012-13 the record high global total can be largely attributed to a recovery in the world’s leading producer,” the ISO said.
Millers in the South America nation will make 40.3 million tons of the sweetener in 2012-13, up from 35.2 million tons a year earlier, the sugar group estimates. Dry weather during the last months of the crushing period in Brazil’s center south, the country’s main growing areas “allowed production in the region to race ahead of market expectations,” the ISO said. The 2013-14 harvest in the center south will start in April.
Sugar fell 39 percent in the last two years and is down 8.5 percent this year. The sweetener is the worst performing commodity in the Standard & Poor’s gauge of 24 raw materials in 2013. Another year of price declines would mean the longest slump since 1992, data on Bloomberg showed.
“With the 2012-13 surplus significantly larger than initially anticipated and a rather low probability of a return to a deficit phase in the next crop year, it seems that the bearish pressure on world market prices is unlikely to fade, at least before the end of the current season,” the ISO said, referring to the 12-months through September.
Stockpiles at the end of the season will rise to 69.7 million tons from 64.3 million tons at the end of 2011-12, the ISO estimated. Global import demand will fall to 50.7 million tons in 2012-13 from 53.2 million tons a year earlier, while export availability will be little changed at 53.9 million tons compared with 54 million tons a year earlier, the ISO estimates.
“Our third assessment of the world sugar balance for 2012-13 reinforces the initial view that the period of low stocks environment, one of the main market characteristics for the four seasons from 2008-09 to 2011-12, is over,” it said.