Global sugar market in huge surplus, looks to Asia
The global sugar market may see supply vastly exceeding requirement in the next crop year, leaving producers at the mercy of seasonal demand from Asia and weather-related output disruptions, industry experts said on Monday.
Weak prices have spurred demand for the sweetener from consumers in Asia, especially China, while erratic weather in top producer Brazil could offer the market much-needed support.
The global sugar surplus was revised higher to 9.3 million tonne in the 2012-13 crop year from a previous projection of 5.7 million tonne because high prices earlier in the year had spurred planting, consultancy Kingsman said.
"The fact is we do need to get acceleration in demand," Toby Cohen, director of Merchant Czarnikow, told a sugar conference organised by Kingsman in the Thai capital. The market needs this Asian demand. The market needs that growth.
Cohen earlier told Reuters Czarnikow expects a 2011-12 global sugar surplus at 7.7 million tonne, unchanged from a prior estimate. We are comfortable with that number. We will be publishing a number for 12-13 but I am not prepared to release that just as yet, Cohen said.
Benchmark New York raw sugar futures have plunged more than 20% since hitting this year's peak above 26 US cents a pound in February, hit by ample supplies and fears that Europe's debt crisis could spur a global economic meltdown, hurting demand for commodities.
Kingsman pegged China's consumption at 15.480 million tonne in the 2012-13 crop year, steady from 15.250 million tonne in the previous year. Total demand in Asia is forecast at 66.799 million tonne in 2012-13, up from 65.635 million tonne.
Total Chinese sugar consumption is expected to grow 63% in the decade to 2020, with imports likely to rise to 4 million to 5 million tonne by 2020, says Commonwealth Bank of Australia.