Rabobank Report: Global Sugar Industry Q3 2014

Prices Dwindle under Weight of Stocks

NEW YORK--()--Rabobank has issued a new report on the global sugar industry, forecasting a tighter market than expected based on recent supply and demand conditions.

In the report, published by Rabobank’s Food & Agribusiness Research and Advisory group, bank analysts say that world market raw sugar prices declined abruptly during Q3 2014, as exportable stocks in Thailand and in Brazil weighed on the market. March 2015 futures hit a low of USc/lb 15.6 in mid-September. As a result, Rabobank anticipates a modest deficit on the cards for the global supply demand balance in 2014/15. This is expected to help redress—albeit gradually— the current imbalance between export availability and import demand. All commodity price trends are likely to be influenced by macroeconomic developments such as the evolution of the U.S. dollar against other currencies.

“Despite all of the short-term pressure and recent low prices, Rabobank still maintains a constructive view for 2015,” explains Rabobank analyst Andy Duff. “In fact—and opposed to what recent price movements may suggest—our revised supply/demand balance points to a tighter sugar market in comparison to our last estimate in Q2.”

Rabobank has revised the 1.4 million tonnes raw value surplus, projected to the finishing international crop year (October 2013/September 2014), to an almost balanced situation. For the coming 2014/15 year, Rabobank have reduced their estimate from a deficit of 0.9 million tonnes raw value to one of 3.2 million tonnes.

Regional Outlooks:

  • India: Based on current estimates of the new crop in various states, and expected yield and recovery rates, Rabobank believes that sugar output in 2014/15 will be around 24.5 million tonnes.
  • EU: Favorable conditions for planting and growth to date, combined with a modest increase in area, indicate that output in 2014/15 could be as much as 8 percent above output in 2013/14.
  • Mexico: Production in this coming cycle is estimated at 6.3 million tonnes, up from 6.0 million tonnes in 2013/14.
  • Brazil: UNICA has revised its estimate of Center/South Brazil’s harvest down to 546 million tonnes.
  • U.S.: With a tight U.S. sugar balance sheet, a reduced sugar beet crop and an ongoing trade dispute with Mexico, U.S. sugar prices have risen significantly and are expected to remain firm.
  • Australia: The Australian sugarcane crush is gaining momentum following a slow start and is forecast at 32 million tonnes, which, if achieved, will be the largest Australian sugarcane harvest in five years.
  • Indonesia: Production in 2013/14 is expected to be no higher than 2012/13, due to wet conditions during crushing season.
  • Thailand: Production for 2014/15 is expected to fall by more than 9 percent, after drops for the past 2 years.
  • China: Production for 2014/15 is looking to fall around 9 percent year-over-year from 2013/14.

For more information about this publication please contact author Andy Duff at andy.duff@rabobank.com +55 11 5503 7235

Rabobank Group is a global financial services leader providing wholesale and retail banking, 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. In North America, Rabobank 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 sectors of agriculture. www.rabobank.com/f&a

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Contacts

Media:
Lynne Burns
Rabobank
O: 212-808-2581
Lynne.burns@rabobank.com
or
Sarah Kolell
Rabo AgriFinance
O: 816-516-7984
Sarah.Kolell@RaboAg.com
or
Jessup Wiley
Rabobank, N.A.
O: 559-447-7946
Jessup.Wiley@rabobank.com

Contacts

Media:
Lynne Burns
Rabobank
O: 212-808-2581
Lynne.burns@rabobank.com
or
Sarah Kolell
Rabo AgriFinance
O: 816-516-7984
Sarah.Kolell@RaboAg.com
or
Jessup Wiley
Rabobank, N.A.
O: 559-447-7946
Jessup.Wiley@rabobank.com