World sugar prices are likely to fall further this year as surplus availability is seen more than doubling to 8.5 million tonnes, the chief executive of the International Sugar Organisation said on Thursday.
"I don't think we have achieved the lowest price at the moment. I am afraid prices might go further down," Peter Baron told Reuters a day ahead of speaking at a global commodities conference in Mumbai.
"We are approaching a massive surplus in 2007. There is not much hope regarding prices," he added. He said sugar prices would fall despite increased use of sugar cane for making ethanol. On Wednesday, the New York Board of Trade's May raw sugar contract rose 0.16 cent to settle at 9.91 cents per lb. July added 0.11 to 9.89 cents. One contract aside, the rest gained 0.10 to 0.12 cent.
"What makes the situation not easier is that export availability this year is about four million tonnes higher than the import demand," Baron said, adding that global demand for imports in 2007 would be 44 million tonnes. Raw sugar prices reached as high as 19 cents a pound early last year but have been falling since then as high prices had made it attractive for many countries to grow more cane, Baron said.
Leading traditional importers like Russia, Egypt, and Indonesia since last season have been aiming to produce more sugar to soften the blow of rocketing prices, he said.
But Baron, whose forecasts on trends are observed keenly by traders across the world, added that demand for sugar in China would rise as its economy expanded. "China will remain an importing market for long." He said sugar prices this year would hover about 30 percent to 40 percent lower than the average price of last year.
"We saw at the very beginning of the season of 05/06 that it could be a deficit season, only when we heard fantastic figures of India, Brazil and the European Union, then the picture turned and we realised...this will be a surplus," he said.
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