The International Sugar Organization (ISO) has significantly raised its estimate for the surplus on the global sugar market in the current 2014/15 season. Instead of 620,000 tons, it is now expected to total 2.2 million tons. This is because production figures for India and Thailand have been upwardly adjusted. Despite the disappointing Brazilian sugar production, global production is therefore set to be 1.6% higher in 2014/15 than in the previous season. That said, the ISO expects to see a deficit of around 2.3 million tons for the 2015/16 season which will begin following its convention in October. Brazil’s role remains unclear: the harvest that has been underway there since April is already being counted towards the international year 2015/16.
The Brazilian Sugarcane Industry Association (UNICA) expects Center-South, by far the biggest growing region, to see sugar cane processing stepped up by 3.3%, notes Commerzbank. However, a lower sugar concentration and an increased use for ethanol mean that sugar production looks set to stagnate at just shy of 32 million tons. Brazil’s state forecasting authority Conab had shown somewhat greater optimism in April, envisaging 5% higher sugar production for Center-South. If the deficit does turn out to materialize in 2015/16, however, the ISO believes it will have only a limited impact on price because international warehouses are amply filled following years of surpluses.
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