Sugar shortage in 2014~2015

Brazil , Commodities , El Niño , Sugar , Thailand Jul 21, 2014 No Comments

SugarGlobal output of raw sugar will fall short of demand by about 900,000 metric tons in the 12 months from October compared with a glut of 1.4 million tons in 2013-2014, Rabobank said in a quarterly report. While it’s too early to be certain that the market is passing an inflection point, there’s now a trend toward higher prices, albeit a slow one, it said.

The global sugar market has been trading sideways in the past three months, as prices have been confined in a range between USc 16.5/lb and USc 18.5/lb, according to Rabobank’s Sugar Quarterly Q2 2014. Brazil continues to send conflicting signals to the sugar market. While initial cane production estimates of 570 million tonnes and 32.8 million tonnes of sugar remain for the region, this is subject to revisions, depending on how the weather progresses in the coming months after a long dry period.

World sugar production overall is expected to decrease slightly for the second year in a row, suggesting that low prices during the last couple of years may finally be generating a response. Preliminary global production estimates for the 2014/15 (October/September) global balance, suggest a projected deficit of 0.9 million tonnes raw value.

“We are likely to see the market swing back into deficit, mainly because of a reduced production in Center-South Brazil and Thailand, and increasing global consumption,” Tom McNeill, director at Green Pool Commodity Specialists, a Brisbane-based researcher, said in an e-mail today. Brazil and Thailand are the world’s two largest exporters of the sweetener. Also, the El Niño phenomenon, now expected by the end of 2013, will be closely watched.

Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

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