The raw sugar price has remained stable at 10.6 U.S. cents per pound in recent days, which is not far off the seven-year low it hit recently.
The International Sugar Organization (ISO) published new forecasts of the supply situation on Wednesday: the estimated surplus for 2014/15 was upwardly revised from 2.22 million to 3.37 million tons. According to the ISO, global sugar stocks have grown by 25 million tons in the past five years due to the surpluses.
Despite an anticipated deficit of 2.49 million tons on the global sugar market in 2015/16, the ISO therefore sees no reason for concern because the market will remain amply supplied.
Global sugar production in 2015/16 looks set to decline by 1.1% to 171 million tons, whereas global demand is set to grow by 2.4% to 173 million tons, says Commerzbank. This is because manufacturers of lemonade, ketchup and chocolate have announced their intention to use more sugar in their production again rather than alternative sweetening agents. According to the ISO, the deficit in 2016/17 could even rise to 6.2 million tons.
The ISO forecasts do not yet take any account of possible consequences of the El Niño weather phenomenon, however, which could further weaken sugar production in the next two crop years. Even now periods of dry conditions are being seen in Thailand, the world's second-largest sugar exporter. It therefore remains to be seen what impact El Niño will have and whether this will ease the pressure on the sugar price, adds Commerzbank.
Source: www.econotimes.com