LONDON — Sugar demand rising by about 2% will help reduce the global glut as output remains little changed from last season, according to Czarnikow Group Ltd.
Sugar production in Thailand will be 11.1 million tonnes, down from 12 million tonnes in 2013-14, according to Czarnikow Group Ltd.
Global sugar production will exceed demand by 600,000 metric tonnes in 2014-15, following a surplus of 4.4 million tonnes in 2013-14, the London-based trading company said in a report today. World consumption is expected to climb 2.1% to 182.5 million tonnes in 2015, while output will be little changed at 184 million tonnes, it said.
"Two% annual growth adds roughly 3.5 million metric tonnes raw value to consumption each year," Ana Carolina Ferraz, analysis manager at Czarnikow, said in the report. "This helps to reduce the scale of the surplus each season. The market remains well supplied" after about 21 million tonnes were added to inventories in the past three seasons, she said.
Raw sugar prices in New York dropped almost 60% from a 30-year high of 36.08 cents a pound reached in February 2011 as world supplies outpaced demand. Futures traded at 14.89 cents on ICE Futures US today, after yesterday touching the lowest for a most-active contract since June 2010.
Output in the centre south of Brazil, the world's biggest grower, will be 31.9 million tonnes as agricultural yields were better than expected after a drought hurt production, according to Czarnikow. Dryness also raised sucrose levels in the cane, limiting the shift towards more ethanol production this year.
Production in Thailand, the second-biggest exporter of the sweetener, will be 11.1 million tonnes, down from 12 million tonnes in 2013-14, Czarnikow said. Supplies from China are also expected to decline by 13% to 12.6 million tonnes, it said.
Czarnikow forecasts Indian sugar production at 29 million tonnes, about an 8% increase on 2013-14. Output in the European Union will be 19 million tonnes, "one of the largest EU crops in recent history," and 11% higher than last season, it said.