Rabobank: Weather Patterns and Global Back Stock Support Global Surplus for Sugar
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.
12 Sep 2012 --- 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, according to a new Rabobank report. 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.
Source: Rabobank
