Kingsman sees sugar surplus in '10/11
Dubai, February 8, 2010
Consultancy Kingsman SA forecast on Monday a 2010/11 (April-March) global sugar surplus of 3.99 million tonnes, against a deficit for 2009/10 of 11.92 million tonnes.
It was Kingsman's first forecast for the global 2010/11 sugar supply/demand balance. Previously, Lausanne-based Kingsman had forecast a 2009/10 deficit of 8.3 million tonnes.
In a statement released at the Feb 7-9 Kingsman Dubai sugar conference, Kingsman said the new centre-south Brazilian harvest was expected to produce 33.8 million tonnes of sugar, up 5.4 million from the previous year.
Brazil is the world's biggest sugar producer and exporter.
"But (Kingsman) warned that if rains continue through April the industry will have difficulty in achieving this (2010/11 centre-south Brazil) figure," the statement said.
In an interview with Reuters on the sidelines of the Dubai conference, Jonathan Kingsman, managing director of Kingsman SA, said he saw very limited impact from fungal disease (orange rust) on the 2010/11 centre-south Brazilian cane crop.
"The crop is likely to be affected by wet weather which makes it easier for the disease to spread, but 70 percent of the cane in Brazil is resistant to rust, so this will only affect a small amount of the crop," he said.
Persistent and excessive rains last year eroded yields in the Brazilian harvest, tightening global supplies and contributing to a rally in sugar prices to 29-year highs.
Benchmark raw sugar futures hit a peak of 30.40 cents a lb last Monday, and have since fallen back.
Kingsman said the small global sugar surplus in 2010/11 had to be set in the context of two very large deficits in 2008/09 and 2009/10 which have sharply depleted global sugar stocks.
"It appears that global stocks will remain extremely tight into 2011, given the extraordinarily tight situation in the current market," Tom McNeill, senior partner and head of research at Kingsman, said.
The consultancy said: "We expect (sugar) consumption to get back on track as economies grow in the BRIC countries."
Jonathan Kingsman said he expected Brazilian mills to prefer to produce more remunerative sugar than ethanol from cane this year.
"They (Brazilians) might be struggling to meet demand this year as import demand will be about 3-4 million tonnes more than export supply," he said. "It won't be until the next centre-south Brazil crop in 2011/12 that importers may be able to relax." - Reuters