Milling & Baking News - March 10, 2020 - 17

Industry Activities

Analysts see global sugar supply
improving with Brazil harvest

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remains a key variable risk."
Vincent O'Rourke, trade and market analyst, C. Czarnikow Sugar, Inc.,
told Colloquium attendees that shortages around the world and changes in

29,000*

26,500**

26,510

36,048

35,628

31,221

32,011

34,295

34,096

31,304

33,500

28,645

26,749

26,201

Brazil sugar production
in 1,000 tonnes

LA QUINTA, CALIF. - Analysts at
the 40th annual International Sweetener Colloquium held Feb. 24 in La
Quinta agreed that global sugar supplies would be tight near term but
would increase when new-crop Brazilian sugar comes to market as the
year progresses. Indications that Brazilian sugar mills will favor sugar over
ethanol, unlike the previous couple of
years that saw a record percentage of
Brazil's cane crush go to ethanol, will
help boost sugar supply, they said, as
will increased production in several
other regions in the coming year.
Tight near-term global sugar supply was the result of lower production in the United States and Mexico,
a late and slow start to India's cane
harvest, and sharply lower production in Thailand, said James Liddiard,
senior vice-president, Agrilion Commodity Advisors, L.L.C. He noted
that sugar production was down
about 760,000 tonnes in the United
States, to 7.4 million tonnes, and that
cane sugar outturn in Mexico was
forecast at 5.67 million tonnes, down
about 12%. Production in India in
2019-20 was forecast at 26 million to
28 million tonnes, down from 33.1
million tonnes in 2018-19. And outturn in Thailand was forecast at 8.57
million tonnes, down sharply from
over 14 million tonnes a year earlier.
Mr. Liddiard noted that raw and refined sugar prices had risen sharply as a
result of tightening supplies, with New
York world raw futures (No. 11) and
London white sugar (No. 5) the two
best performing commodity futures so
far in 2020, with front months leading
the way higher in both markets. Front
months in both New York and London
recently were at 2.5-year highs.
But the global sugar supply situation could turn around quickly, Mr.
Liddiard said. Brazil was most likely
to respond, with sugar prices at a premium to ethanol for the first time since
2017. Sugar could make up 37% to
41%, or more, of Brazil's south-central
region cane crush, after a record-low
34.5% in 2019-20, he said. However,
"no one has the slightest idea what
the mills are thinking," he cautioned
about Brazil's sugar production. Mills
were heavily hedged in sugar but have
the ability to buy back those hedges.
"How sugar producers react now
will be key," Mr. Liddiard said, "but
forecasts are not set in stone. Weather

Bangladesh. Canada has been a major
buyer of sugar from Central America,
but this year more sugar from Central
American countries, such as Guatemala, may go to east Asia to replace
exports from Thailand, he said.
"Easy" sources of Central American
sugar for the United States may not be
available if the United States doesn't

07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21
Source: Unica

*analyst forecast **estimate

trade flows may affect the ability of
the United States and Canada, both of
which had short sugar beet crops in
2019, to import sugar. Thailand, typically the third largest exporter in the
world, tends to export to east Asian
markets, while India tends to export
to west Asia markets such as Iran and

act soon enough, Mr. O'Rourke said.
"Southeast Asia has an impact on
potential U.S. sources," he said, which
could be a problem if Mexico can't fill
its export commitment to the United
States.
Tom McNeill, managing director,
Green Pool Commodity Specialists, said

S O U R C E * B L E N D * I N N O VA T E

& Baking News
March 10, 2020 / 17
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Milling & Baking News - March 10, 2020

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