Green Pool Raises Sugar Surplus Estimate by 40% on Asian OutputIsis Almeida
The global sugar surplus will be 40 percent bigger than previously forecast as rising output in Asia will more than compensate for a decline in Brazil’s main growing region, according to Green Pool Commodity Specialists Pty.
Supplies will be 4.66 million metric tons higher than demand in the 2013-14 season that starts next month in most countries, according to the Brisbane, Australia-based researcher. That compares with an August forecast for excess supplies of 3.33 million tons. Green Pool’s supply and demand balances are done on a national crop year-basis, which starts when the harvest begins in each producing country.
“The increases have really come from Asia, so China, India, Thailand and Pakistan,” Tom McNeill, a director at the company, said in a telephone interview today. “There’s a lot of chat about center south Brazil dropping a bit of tonnage, but Asia really is having good growing conditions.”
Raw sugar futures traded in New York are down 7.6 percent this year and are heading for a third annual decline, the longest losing streak since 1992. Prices that reached a 30-year high in 2011 prompted growers from Australia to leading producer Brazil to expand output, resulting in excess supplies. The surplus was a record 10 million tons in 2012-13, according to the International Sugar Organization in London.
Sugar production in India, the second-biggest grower, will be 24.2 million tons in 2013-14, 1.7 percent bigger than an August forecast, McNeill said. While output in Thailand, the second-biggest exporter, is estimated at 10.8 million tons, it may be as high as 11 million tons, he said. Green Pool’s August estimate for the nation was for output of 10.7 million tons. Thai shipments will probably exceed 8 million tons, he said.
Pakistan will produce 5.1 million tons of sugar in 2013-14, up from an August forecast of 4.8 million tons, according to the researcher. In China, output will be 2.3 percent bigger than the previous forecast at 13.1 million tons. “Better” monsoon rains boosted the potential for crops in Asia, said McNeill, who has followed sugar for more than 25 years.
Millers in Brazil’s center south, the main growing region, will process 578 million tons of cane in 2013-14 and make 33.8 million tons of sugar and 25.5 billion liters (5.6 billion gallons) of ethanol, Green Pool forecasts. That means 44.7 percent of all the cane crushed will be used to make the sweetener. Sugar production in the area was 34.1 million tons in 2012-13, data from Sao Paulo-based industry group Unica showed.
London-based Czarnikow Group Ltd. cut its surplus forecast by 49 percent to 2 million tons on Sept. 5, citing increased consumption. Deutsche Bank AG reduced its excess supplies forecast by 52 percent to 2.6 million tons on Sept. 25.
“There’s a lot of talk in the market about all these numbers coming down,” McNeill said. “Unless there’s a major problem with harvesting in Brazil, I can’t really see why surpluses are being reduced to the degree they are.”