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Global sugar market firmly on path to surplus in 2017/18
[LONDON] The global sugar market is "firmly on the path to return to surplus" in 2017/18 after two consecutive deficit years, Tropical Research Services (TRS) said in a report on Monday.
TRS forecast there would be a surplus of 1.82 million tonnes, raw value, following deficits of 8.01 million in 2016/17 and 5.93 million in 2015/16.
Global sugar production was forecast to climb by 6.9 per cent in 2017/18 to 186.35 million tonnes with consumption rising by a more modest 1.2 per cent to 184.53 million.
TRS said the rise in production was driven by increased output in India, the European Union, Thailand, Centre-South Brazil and South Africa.
"The role of sugar weather is still pivotal if the expected global sugar production recovery is to materialize but global sugar weather risk has eased," TRS said.
"Global sugar weather for the 2017-18 crop year has, generally, been benign." TRS noted, however, that Indian sugar cane had seen a hotter than normal and a drier than normal pre-monsoon period which was leading to some concerns about the potential for a crop recovery in Western and Southern India.
Consumption growth in 2017/18 of 1.2 per cent would be above the prior season's 0.8 per cent but below the long-term trend rate of 1.5 per cent.
TRS said lower prices and a need to replenish stocks could boost consumption growth but noted the decline in demand from the food and beverage industry "may represent a step-change lower in the rate of global sugar demand."