Sugar surplus estimate for next season cut to 3.52 mt

Kingsman SA has revised downwards its estimate of global sugar output for 2010-11 to 167.72 million tonnes (mt) raw value, from its earlier forecast of 170.17 mt.

With consumption pegged at 164.20 mt, the production surplus for the crop year to March 2011 would be 3.52 mt.

This is lower than the 5.17 mt excess that Kingsman had projected on June 1, based on a consumption assumption of 165 mt.

'TIGHT GLOBAL BALANCE'

“The global surplus we had expected earlier this year is reducing. This small surplus will help rebuild the earlier depleted stocks, but given the sizeable deficit forecast for the first half of 2011, the global balance would still be tight. And we are assuming no further weather-related production risks,” the head of the Lausanne-based sugar consultancy, Mr Jonathan Kingsman, said at the 2 {+n} {+d} Indian Sugar Summit here on Wednesday.

Adverse weather

The reduced production estimates follow adverse weather events in Brazil, Russia, China, Pakistan, South Africa and elsewhere. Mills in Brazil's main South-Central region were expected to crush 595.89 mt of cane at the start of the season in April.

The latest estimate, released by the Sugarcane Industry Association or UNICA, is that only 519.19 mt would get crushed, courtesy persistent dry weather.

“Despite this, we will still crush more than the 541.9 mt and 504.9 mt of 2009-10 and 2008-09 respectively. Also, the dry weather has helped in better recovery, compared to last year, when we had excess rains. The total recoverable sugar content this time will be higher, at 141.3 kg/tonne, against 130.2 kg in 2009-10,” noted Mr Marcos Sawaya Jank, President of UNICA.

As a result, Brazil's (South-Central region) sugar production may touch 33.73 mt in the current season, which is higher than the 28.6 mt of 2008-09, but less than the original 34-35 mt projections.

Mr Kingsman said similar downgrades are seen in China (11.5 mt versus earlier estimate of 12.5 mt) and Russia (4.2 mt versus 3.2 mt), with expectations also lowered in Philippines, Indonesia and Pakistan.

The European Union's exports are projected to fall by 650,000 tonnes in the next crop year.

The ‘positive' territories

That essentially leaves Thailand, Australia and India.

During the 2009-10 season (November-April), Thailand produced 6.923 mt and domestically consumed 2.2 mt, leaving 4.7 mt for exports.

“We don't expect much change next season,” said Mr Prakit Pradipasen, Chairman of the Thai Sugar Millers Corporations Ltd.

Likewise, Australia's production in the current crop year that began in July is estimated to go up only marginally from 4.4 mt to 4.5 mt, according to Mr Warren Males, Adviser to the Australian Sugar Milling Council.

It all boils down then to India, where a firm picture of production prospects for the 2010-11 season (October-September) is still to emerge. Current projections vary from a low of 22 mt to as much as 28 mt.

“For the moment, we would settle for a consensus of 25 mt. Moreover, the difference between the first estimates and final outcomes can be enormous, amounting to 6.75 mt in 2006-07, 9.25 mt in 2008-09 and 2.27 mt in 2009-10,” Mr Kingsman pointed out.

source: thehindubusinessline