Sugar outlook

With the fiscal year drawing to a close, the USDA predicts global sugar production for FY15 to show a fall for the third consecutive year to 174.3 million tons. Consumption has been comfortably within range, and the final tally for FY15 is expected at 170.6 million tons.
For Pakistan, for the year ended June 30, the USDA predicts sugar production to equal 5,230 million tons - a drop of 7.1 percent over the preceding year. However, the FY16 forecast is at 5,430 million tons.
The report puts Pakistan in the top 8 sugar producers of the world. But much like wheat, we don always have an exportable surplus; from December 2008 to February 2012, Pakistan had zero sugar exports.
As for productivity, sugar recovery in Pakistan averages at near 9 percent, which isn all that bad considering the fact that the worlds second-largest producer, India, averages 10 percent.
Sugar is not that big a contributor to exports; as of the ten months ended April, sugar exports accounted for just over one percent of total exports, and were down 15 percent over the year-ago period. Global sugar prices have plummeted since the start of FY15 and have yet to recover, so the value of sugar exports has been lower.
Although sugar is considered one of the more important cash crops of the country, it hasn been bringing in too much foreign exchange. Perhaps this is because the government support price is far higher than the international price, and sugar producers prefer to remain within the local market.
For FY16, the USDA expects another drop in global production and a subsequent rise in consumption. As for Pakistan, the hike in fuel prices is expected to up the domestic sugar prices.