SUGAR AND THE BRIGHT LIGHT
This year has been challenging to say the least. We started the year with strong prices as we were coming from a deficit year and we would need supply to react.
All hopes were on Brazil and they didn’t disappoint. The production was/is strong. What wasn’t expected was the virus and how the world would react. We had demand dropping and panic heating the “sell button” and we know what happened!
Then as many economies opened up, demand came back and clarity improved. We had some Sugar demand affected and the final “numbers” are yet to be confirmed, but it seems it wasn’t as bad as many had expected. The current lockdowns are not as stringent as before and the hope for a vaccination program is bringing optimism to the markets.
So, as we end 2020 and start 2021, the expectations for consumption to sustain current levels and improve are vivid and showing a brighter future.
What about production? Brazil is ending the current harvest soon and total production may reach 37,7 mln m/t about 11 mln m/t. So, more Sugar and more exports.
India is heading for a better cane crop (higher acreage and better yields) and although some “juice” may go to ethanol, the current crop is estimated at 31/32 mln m/t an increase of 4 to 5 mln m/t vs. previous crop. The ending stocks dropped 4 mln m/t but is still high at 10,3 mln m/t by end of Sept. Millers want the Gov to support exports with “incentives” but despite a lot of pressure nothing yet has been announced (as of the 25th Nov 2020). We hear the “incentives” or “support” may be INR 5/7000 (US$ 68/95 per m/t) but there is also the “risk” of no help at all (low chances).
The US and Mexico will have larger crops and will import less and perhaps export more, respectively.
So, for the time being we are having to rely largely on Brazilian exports. That’s where the good news starts and ends!
The weather this year hasn’t been great and we are seeing crops suffering in the EU/CIS and Thailand is likely to have a smaller crop. Central America is unlikely to improve.
What about World Sugar Trade? During the first semester of 2020, the World Sugar Trade was stronger by 4,7 mln m/t reaching 29 mln m/t the highest volume so far. We have seen stronger demand from Indonesia and China and tolling Refineries. For the 3rd Quarter China remains a strong importer.
28 | ADMISI - The Ghost In The Machine | Q4 Edition
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