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WORLD SUGAR MARKET REVIEW


The world sugar economy is facing a second consecutive year of a significant gap between world consumption and production. The first revision of the world sugar balance for October 2009 to September 2010 puts world production at 159.887 mln tonnes, raw value, up by 6.911 mln tonnes or 4.5% from the last season. A forecasted limited growth in sugar output in Brazil, a modest production recovery in India after last season’s unprecedented shortfall, and a higher sugar crop in the EU have become the three major supply features of 2009/10. World consumption is expected to grow at a rate significantly lower than the long-term 10 year average (1.71% and 2.66%, respectively). The lower growth is attributed to impacts of the 2008/09 global recession on sugar consumption growth rates in developing countries as well as soaring world market prices. Even so, global use of sugar is expected to reach 167.134 mln tonnes. Therefore, the growth in global production is far too small to cover sugar consumption and the world statistical deficit is expected to reach 7.247 mln tonnes as against 8.404 mln tonnes projected in September, 2009.

A summary of the revised world sugar balance in 2009/10 is provided in the table below.

World Sugar Balance

 

2009/10

2008/09

Change

 

(mln tonne, raw value)

in mln t

in %

Production 159.887 152.976 6.911 4.52
Consumption 167.134 164.316 2.818 1.71
Surplus / Deficit -7.247 -11.340    
Import demand 52.072 48.180 3.892 8.08
Export availability 52.079 48.250 3.829 7.94
End Stocks 53.471 60.725 -7.254 -11.95
Stocks/Consumption ratio in% 31.99 36.96    

Source: ISO quarterly market outlook, November 2009


SUGAR ABROAD


BRAZIL

In late November, UNICA released an update on the progress of Brazil‘s Centre-South 2009/10 harvest to 15th November. Cumulative sugar production to 15th November reached 26.181 mln tonnes, tel quel, up 9.82% year-on-year. Ethanol production during the same period amounted to 20.412 bln litres, down 5.46% on the year-ago level. A much higher proportion of cane has been allocated to sugar compared to last year, or 44.03% relative to 40.30% in the year-ago period. Of importance, about 15%, or 40 sugar and ethanol mills in the Centre-South, are expected to crush through the January-to-March inter harvest period. Brazilian sugar exports in November reached 2.478 mln tonnes, 10% higher than in October and only marginally down on the record 2.5 mln tonnes exported in September. A total of 1.85 mln tonnes was exported as raws and 0.63 mln tonnes as whites.

  EU

According to the association of German sugar producers WVZ, the country is expected to produce 4.11 mln tonnes of sugar this season, up from 3.7 mln tonnes last year. A rise is attributed to a 4.3% increase in beet area as well as higher sugar content.

  AUSTRALIA

According to the Queensland Cane Growers Organisation Ltd, which represents most of Australia 's cane-growers, sugar production could rise 10% next year as farmers plant more area in response to a doubling in world sugar prices this year. Commonwealth Bank of Australia Ltd expects national production to rise 6.5% next year due to a projected 5-7% increase in cane area.

  THAILAND

Mitr Phol Sugar, Thailand 's biggest sugar miller, plans to expand its crushing capacity over the next two years in response to high world sugar prices. In Thailand only, the company’s crushing capacity is expected to rise to 13 mln tonnes of sugarcane next year, up from 11.8 mln tonnes this year.

  GUATEMALA

According to the national sugar producer's association Asazgua, the country exported 1.37 mln tonnes of sugar in 2008/09, 2.6% more than in the previous cycle. In October alone Guatemala exported 145,000 tonnes, more than four times the amount shipped in the same month last year.

CHINA

The domestic sugar production in the 2009/10 season is expected to rise 3% from the previous season's 12.43 mln tonnes. The China Sugar Association puts sugar consumption at 13.9 mln tonnes, up 3% from the previous season. The central government plans to release 0.5 mln tonnes of white sugar from state stockpiles in order to control surging domestic prices. The government has not officially announced the size of the state's white sugar reserve, but local analysts have estimated them at 2.3-2.6 mln tonnes.

  RUSSIA

A significant increase in imports is expected in 2009/10 as Russia ’s sugar stocks are depleted. Last season, due to a sharp increase in the cost of import financing, purchases from the world market fell dramatically. During 2008/09 (October/September), raw sugar imports reportedly decreased to 1.645 mln tonnes only from 2.678 mln tonnes in 2007/08. The volume of imports was not high enough to cover the gap between domestic production and consumption estimated at 2.375 mln tonnes. As a result, about 0.8 mln tonnes of sugar from stocks had to be used, reducing the stocks/consumption level to below 15%. In the new season, consumption is expected to exceed domestic output by 2.825 mln tonnes, and stocks are low. So, most of the gap has to be covered by imports. At present, the ISO forecasts the new season’s overall import demand (including imports of about 200,000 tonnes of white sugar from the neighbouring FSU countries) at 2.650 mln tonnes, raw value.

PAKISTAN

In 2009/10, Pakistan is expected to buy more sugar from the world market than in the previous season. Reportedly, the government has decided to import 0.50 mln tonnes of raw sugar and 0.50 mln tonnes of white sugar to meet a shortfall in domestic output in 2009/10(November/October). Last season the country imported an estimated 330,000  tonnes only.

BANGLADESH

According to the Bangladesh Sugar and Food Industries Corporation, 15 state-owned sugar mills will produce around 100,000 tonnes of sugar in the upcoming 2009/10 (November/October) sugarcane crush, up from 75,000 tonnes in the previous season. That will lead the country to import around 1.1 mln tonnes of raw sugar in the current fiscal year to June 2010 to meet domestic demand of some 1.2 mln tonnes of refined sugar.

  INDONESIA

As reported by Indonesian Sugar Refiners Association, the industry is planning to build 15 sugar mills and develop at least 300,000 hectares of sugar cane plantations over the next five years in order to end its dependence on imports. According to the Ministry of Agriculture, in 2010 sugar output is seen rising 8.6%, to 2.9 mln tonnes in 2010, from 2.67 mln tonnes in 2009, as a larger area is expected to be planted with sugar cane.

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