ISO sees record sugar production at 178.69 million tonnes

Published: 03/01/2018, 4:25:44 PM

Global sugar production is expected to hit a record high this season, said the International Sugar Organization in its quarterly market report on Thursday, according to Dow Jones.

In its quarterly assessment, the global sugar supply-demand balance, the ISO said it expected production to increase 6% to hit 178.698 million tonnes, its highest-ever level "on the back of massive production gains projected for China, the EU and India, as well as record production in Thailand."

Since the ISO released its previous quarterly report, raw sugar futures have remained in a low, narrow range due to continuing--even growing--expectations of huge inventories at the end of the season.

With production expected to rise by 10.5-million tonnes, consumption was not forecast to keep up, rising only 2.8-million tonnes, or 1.6%, on year.

As a result, global supplies are expected to swing from a 2.5-million tonne deficit in 2016-17 to a 5.2-million tonne surplus in 2017-18, the ISO said.

That large surplus is expected in spite of a significant production drop projected for Brazil, "where millers' preference is swinging away from sugar to ethanol," amid rising oil prices, the report said.

Nevertheless, prices are expected to remain weak, if not grow weaker.

"Since November 2016, the ISO has been emphasising that the 2017/18 fundamentals do not support world prices. The downward drift from above 20 cents/lb in January 2017 to the present level below 14 cents/lb is confirmation of this," the report said.

"Our recent revision of global fundamentals indicates that the size of global surplus may be even slightly higher than was assumed at earlier stages of the season. Moreover, early indications point towards a high probability for this surplus phase to last one more season," the ISO said.

World export availability, though, is not expected to rise significantly "due to some large stock rebuilding projected for several exporters," the report added, noting an expected 372,000-tonne increase on the previous season.

Raw sugar prices were last up 0.15% at 13.41 U.S. cents a pound.