Global sugar surplus for 2012/2013 should increase to 5.2 million tonnes from previous projection of 4.6 million tonnes as recent weather patterns have proven favorable for harvesting, according to Rabobank report
September 11, 2012
– Rabobank has published a new Q3 report looking at the global sugar industry, looking at pricing, stocks, consumption and an outlook for the coming year.
In the report, Rabobank's Food & Agribusiness Research and Advisory team says that New York raw sugar futures rallied in mid-June, with prices driven close to USc 24/lb in the last week of July supported by concerns regarding Brazilian and Indian production. Since then, perceptions about both crops have improved as recent weather patterns have proved favorable for harvesting, which has brought prices back to around USc 20/lb. Similarly positive outlooks for Russia, China and Thailand, have led us to increase our projection of the 2012/13 surplus from 4.6 million tonnes to 5.2 million tonnes of sugar, raw value.
Projected sugar surplus for 2012/13 has been revised upwards as India's monsoon appears to have recovered somewhat, and the growing consensus suggests that cane production in Brazil's Centre/Southern region in the 2013/14 season (part of which falls in the 2012/13 international crop year) could see a significant increase over the 510 million tonnes already expected this season.
Global stocks and the stocks/consumption ratio have risen, with India, China, the EU, Russia, Guatemala and Pakistan among others, contributing to an increase in global sugar production of some 8% from 2010/11 to 2011/12. The end of the 2011/12 international crop year then sees, a far more comfortable global stocks/consumption situation than that of the two preceding crop years. The price cycle has also followed suit: declining as supply has risen.
The weather has also played a pivotal role in generating sugar crop expectations. After a turbulent beginning to their campaign, Brazilian mills are trying to make up for a delayed start to the harvest. Recent weather has been ideal for crushing, but concerns persist around the ability of mills to harvest all the cane in the field before the arrival of the summer rains. Furthermore, above-average rainfall in May and June has had a lasting impact on average cane quality, at least partially offsetting the gains in cane yields achieved this season compared to last.
Elsewhere, the Russian beet crop appears to be exceptional, for a second consecutive year, but production in some parts of Eastern Europe has suffered as a result of dry weather. China appears to be on track for a better cane crop in 2012/13, while Thailand's performance still depends to some extent on the development of rainfall in the coming months. In Australia, meanwhile, output is expected to be 10% up on last season.
A copy of the Rabobank Q3 Global Sugar Industry report is available to media upon request.
Rabobank Group is a global financial services leader providing wholesale and retail banking, asset management, leasing, real estate services, and renewable energy project financing. Founded over a century ago, Rabobank is one of the largest banks in the world, with nearly $1 trillion in assets and operations in more than 40 countries, and ranks among the highest rated private banks by S&P and Moody's. Internationally Rabobank focuses on food and agriculture and in North America it is a premier bank to the food, beverage and agribusiness industry. Rabobank's Food & Agribusiness Research and Advisory team is comprised of more than 80 analysts around the world who provide expert analysis, insight and counsel to Rabobank clients about trends, issues and developments in all major sectors of agriculture