World Sugar-Export Surplus Returns on Indian Demand, EU Supply

  • TRS now sees third-quarter trade glut on lower Indian imports
  • More EU sugar shipments to expand fourth-quarter oversupply

Global sugar exports will exceed demand this season and the next as India brings in less than expected and the European Union boosts output, according to Tropical Research Services, which advises hedge funds.

Exports will beat import demand every quarter through September 2018, TRS estimates. The trade-flow surplus will total 398,000 metric tons in the third quarter, reversing a previous forecast for a shortage of more than double that amount, said Sean Diffley, the firm’s head of sugar and ethanol research.

Raw-sugar futures traded in New York tumbled 25 percent in the past three months as expectations of large imports from India, the world’s second-largest producer, didn’t materialize. Prices also fell as analysts including those at TRS, Green Pool Commodity Specialists and ED&F Man Holdings Ltd. forecast the global market to return to a surplus. This year’s price retreat follows the biggest annual gain in seven years.

“The size of India’s sugar-import program in the 2016-17 crop year has been smaller than expected and the timing of the India import program has fallen back, easing the tightness of the global sugar trade flow balance sheet," Diffley said in a report emailed Monday.

In the final three months of this year, the export surplus will be 49 percent larger than previously expected at 1.2 million tons. Higher prices for earlier-dated futures will prompt traders to boost shipments from the EU, where quotas that cap output end from October, TRS said.

“A faster pace of EU sugar exports, earlier in the crop year, is also justifiable on the grounds of EU warehousing capacity constraints during the peak processing season,” Diffley said. “It remains to be seen whether port infrastructure constraints for sugar may restrict the front-loading.”

Read more: Curbs on EU output will end later this year.

Other third-quarter forecasts:

  • Indian raw-sugar imports will be 384,000 tons lower than previously forecast; the import estimate for white sugar was lowered by 300,000 tons.
  • Oversupply is also a result of lower imports into South Africa, Nigeria, the United Arab Emirates, Saudi Arabia and Indonesia.
Before it's here, it's on the Bloomberg Terminal.
LEARN MORE