WILL THE SUN SHINE FOR SUGAR?


Hindsight is 20/20’ is a saying used when something is rather more obvious on reflection than from the outset.


Fast forward 12 months and sugar prices ended 2018 down nearly 20% having dipped below double digits during the second half of the year  with Brazil and EU production hitting record levels prices were going to continue to fall. The weather across the globe had been, with virtually no exceptions, ideal for growing cane and beet.


Of course, what the market did not know was that sugar production in India and Thailand would surge to unimaginable levels. This time last year Indian production was predicted at a modest 27.5 million tonnes which, might, enable them to become a net exporter later in the year. By the time the last cane was crushed, Indian production stood at a massive 32.4 million tonnes. In Thailand it was a similar story. The predicted large  2 million tonnes more than expected only a few months earlier. Add these surpluses to the production in Brazil (36 million tonnes) and the EU (21.2 million tonnes) the global surplus jumped very quickly from 10 million tonnes to over 17 million tonnes - the biggest surplus ever.


This time last year it was also fairly obvious that the current 2018/19 season was also likely to be another surplus production season albeit on a much smaller scale. While Brazilian production was expected to fall, production levels in India and Thailand were seen likely to be maintained. Only a serious weather issue could alter things dramatically. In the event,  million tonnes.


Thankfully they had an alternative in ethanol to divert their cane. Additionally, EU production is expected to slip marginally from the 2017/18 record highs.  across much of the beet belt of Europe. However, the weather appears to have had less impact than expected. Again, production in India and Thailand looks set to dictate the size of the surplus. It was soon after the last harvest that Indian production for the next season was estimated at 35 million tonnes due to a larger planted area. With Indian consumption at around 26.5 million tonnes their   in Thailand total global production was seen to easily outpace consumption. Recently, production expectations have been scaled back in India to below last year’s record level because of some sporadic dry weather and pest problems.


Thai production is also seen to be slightly lower. Whether total production does fall as much as some predict and hope remains to be seen. It is probably worth mentioning that this time last year the Indian Sugar Mills Association (ISMA) put total Indian production at 26.10 million tonnes – over 6 million tonnes less than the eventual total. Assuming ISMA have not greatly exaggerated production then a small global surplus will still be seen in 2018/19.


10 | ADMISI - The Ghost In The Machine | January/February 2019


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