With many crop uncertainties ahead of us - like Brazil (harvest started), EU/CIS (planting ended), Thailand (cane growing), Pakistan (canegrowing), Central America (cropjust ended). Is it India’s behavior that is keeping the market under pressure,given the risk of another dose of “export incentives”?


Indian sugar consumption is estimated at 26 mln m/t and after a crop of 33 mln m/t and possible exports of mln m/t the carry-over would be 12 mln m/t (end of October 2019).


d a 5 mln We hear the comi


but we also heard the same for the crop that just ended!


o


ed! Unless farmers plant less or don’t replant as much or the weather is horrible, we may still have wellabove the domestic needee s and stockswill rise again!


o s. If


mng crop should drop to 28 mln m/t s


Cane and Beet growers need to address their production but also the need to stimulate demand, most likely via Ethanol. The Brazil example should be followed in many other growing countries, especially India, Thailand and Australia, where the Ethanol consumption can certainlygrow, reducing exportable surplus and improving margins.


Any extra demand is a long-term project and it seems somegrowers and millers may not be able  problems and production issues.


The excess production is continuing tolead tolow or no margins for the Merchants/Traders but this is a phase. Some Traders have given up on sugar, for the time being!


So, at the present moment we see the EU producing a bit more, Brazil not pro year and the rest of the w


producing much more than last world with similar crop


we put them all together and c d compare the result to estimated consumption, then we end upwith a sma


surplus of 2 mln m/t R.V. for April/March 2019/20, similar to Oct/Sept 2019/20.


Sugar prices at current levels of 12/13 cts are r not sustainable in the long term as this leaves nothinghin on the bones for growers to expand and look after their


eir


 isgoing “greener” so the Ethanol story has further upsidepotential.


Wedon’t know how the weather willbe. We hear of the risk of El Nino but it seems like only a 50%  the 2nd largest Indian cane growing state but at the present moment the risk is low.


m ll


What we can say is that nothing lasts forever, neither pain norgain. Consumers are enjoying the low cost, low risk and low volatility. We believe that low prices will lead to lower production eventually and therefore hi her prices will return, it’s just a matter of time. Unti hen, consumers have many tools to consider to protect tht their low costs and higher margins.


ghe l the


 ad


a


ddress the demand upside potential via alternative demand


Alberto Peixoto E: albertopeixoto@apcommodities.londonlon T: 07570 714 981


ands and perhaps India should be encouraged to see the Brazilian example and perhaps speed up the Ethanol demandgrowth.


What sugar is enduring is alsohappening across  Soybeans, where excess production leads to low prices.


29 | ADMISI - The Ghost In The Machine | May/June 2019


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