The sugar market will swing to a deficit as sustained low prices curb supply for a second year, according to Rabobank International, which joined Czarnikow Group Ltd. and Kingsman SA in forecasting an end to surpluses.
Global 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, the bank 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.
Raw sugar retreated more than 50 percent from a 30-year high in 2011 as world supplies consistently surpassed demand. Global output will lag behind consumption by about 500,000 tons in 2014-2015 as production stabilizes, London-based Czarnikow forecast last week. The degree of tightening depends on how a forecast El Nino weather event develops, Rabobank said.
“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.
Raw sugar for October delivery gained as much as 0.8 percent to 17.2 cents a pound on ICE Futures U.S., and was at 17.14 cents at 3:40 p.m. in Singapore. Most-active prices rose 4.5 percent this year, rebounding from a third year of losses in 2013 that capped the longest run of annual declines since 1992.
Source: www.bloomberg.com