Milling & Baking News - March 24, 2020 - 60

Data

Czarnikow cuts global sugar use forecast
because of COVID-19 outbreak
KANSAS CITY - Global commodities trader and market analyst C. Czarnikow Sugar, Inc. said global sugar
consumption could drop by 2 million tonnes or more because of the coronavirus (COVID-19).
Czarnikow analyst Ben Seed, in a note to clients, forecast a 2-million-tonne decline in 2019-20 global sugar
consumption leaving total consumption flat with 201819, compared with its prior forecast of a 1% increase from
2018-19. Global sugar consumption will decline on a per
capita basis in 2020, Mr. Seed said.
"This is due to the collapse of out-of-home food and
drink consumption and the difficulties faced in operating normal supply chains," Czarnikow said, noting that
it disagreed with some forecasts that increased consumer buying of certain food items would at least offset reduced sales at restaurants and institutions.
The decline will be the result of lower overall sugar use
in countries that have implemented lockdowns, including 5% declines in consumption in China, South Korea,
Italy, Germany, France, Poland, Spain, The Netherlands,
Austria and Lebanon, where significant isolation steps
have been taken. Further country-specific and global
reductions in sugar consumption are possible as other
countries increase isolation measures, Czarnikow said.
At the same time, the decline in global sugar consumption

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60 / March 24, 2020

Milling & Baking News

comes at an opportune time because of tight global sugar
supplies, including in the United States. Czarnikow still expects a 10.2-million-tonne global sugar deficit this year due
to lower production in several key countries.
The change from out-of-home consumption to more
in-home demand has emptied grocery shelves of sugar

US and Mexico sugar production
in million short tons, raw value
US beet

US cane

Mexico

2009-10

2011-12

2013-14

2015-16

2017-18

2019-20

Source: US Department of Agriculture

in the United States and some other countries as consumers stock up sugar and other staples.
US sugar processors and refiners contacted by Milling
& Baking News said retail business has been brisk.
"Demand has been extremely strong in the last two
weeks, and we expect order processing to be quite heavy
for the next (several) weeks," said Pedro Figueroa, vice
president of sales and marketing at the Michigan Sugar
Co.
Like many or most other companies, Michigan Sugar's
sales, customer service and transportation staffs were
working from home for their own safety and to prevent the further spread of COVID-19. Michigan Sugar
staff were available 24/7 to meet customer needs, Mr.
Figueroa said.
Overall sugar supplies in the United States already
were tight because of sugar beet and sugar cane crop issues in 2019, as well as a drought-reduced crop in Mexico, by far the largest sugar exporter to the United States.
Spot sugar prices currently are at seven-year highs. Domestic US beet and cane sugar production were down
a combined 11% from 2018-19, while Mexico's cane outturn is expected down 19%.
Some retailers buy sugar on annual contracts, but others buy monthly or quarterly. The shorter-term buyers
will face the sharply higher prices, although one major
cane refiner said grocers may not pass on to consumers
the full amount of higher sugar prices, choosing to treat
sugar as a "loss-leader" to pull customers into stores
once the panic buying subsides.
Also challenging for sugar producers is adjusting
packaging and logistics to meet the shift in demand from
restaurants and institutions to the retail market. Most retail sugar is in 4-lb and 5-lb bags, while restaurants get
sugar in 25-lb or 50-lb bags. Industrial users who buy
sugar in bulk by rail cars or trucks should not see any
change, other than dealing with tight supplies and increased imports, which also will require logistics adjustments. MBN
bakingbusiness.com / world-grain.com

http://www.knappen.com http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - March 24, 2020

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