ISO lifts sugar deficit forecast, but sees no shortages
Category: Sugar
(Agrimoney) – The International Sugar Organisation (ISO) has increased its forecast for the size of the upcoming sugar deficit, but warns that this will do little to eat into the massive stocks that have already accumulated.
The ISO raised its forecast for the 2015-16 sugar deficit, the degree to which consumption outpaces production, to 2.487m tonnes, from an estimate of 2.3m tonnes made in May.
The ISO sees global sugar production in the 2015-16 season at 170.911m tonnes, 1.1% from 172.753m in the previous year.
In the same period, consumption is forecast to grow by 2.4% to 173.398m tonnes.
No relief for stocks
But the ISO warned that “a statistical deficit of the projected magnitude will not provide significant relief to the huge stocks accumulated over the past five seasons”.
The ISO sees sugar stocks at around 25m tonnes after the last five years of surplus.
“No shortages in physical supply to the world market are anticipated,” the ISO said.
“Unforeseen reductions in production and, hence, lower export availability or higher import demand, may be covered by sugar stocks,” the group added.
Deficit forecasts wide
On Thursday agricultural lender Rabobank restated an earlier estimate of the sugar deficit at 3.4m tonnes, while it revised its forecast for next years sugar prices downward due to lower prospects for the Brazilian real, which would allow producers in the world’s largest sugar producer to accept lower dollar denominated prices.
Rabobank sees raw sugar prices in the third quarter of 2016 averaging 11.8m tonnes.
The estimates fall short of a number of other deficit forecasts, although varying methodology can make direct comparisons between forecasts difficult.
This month analysts Green Pool hiked its forecast for the 2015-16 sugar deficit to 4.61m tonnes from a forecast of 2.80m tonnes made in late May.
August also saw cane refiner ASR Group estimate the shortfall at 2.7m tonnes.
El Nino question
The ISO expects the coming season to be “heavily shaped by developments in two sugar giants – Brazil and India”.
India may once again become “a major export power” the group said.
The ISO projections are based on a neutral weather assumption, and the group warned that the effects of the ongoing El Nino event on global sugar production “remain difficult to foretell”.
El Nino is associated with dryness in the eastern Pacific, including key sugar growing regions such as India, Thailand, and Australia, while it causes wetter weather in the America’s.
High rainfall is good for sugar cane growth, but at the wrong point in season it can disrupt harvesting and reduce the concentration of extractable sugar in cane.
