Green Pool said on Thursday it had raised its forecast for a projected global sugar surplus in the 2017/18 season tonnes to 5.55 million tonnes from 4.72 million seen previously. The Australian-based analyst also sharply reduced the size of an expected deficit for the 2016/17 season to 2.04 million tonnes from a previously forecast 3.97 million.
"There remains some upside risks to that (2017/18) surplus - particularly in countries such as India, Russia and Thailand," Green Pool said in a report. "That said, there are some offsetting risks to the downside - while we have maintained a lower sugar figure for CS Brazil than most this year, it is possible our 35.5 mln tonne sugar figure will turn out too high if sugar prices fall further and particularly if they stay low through the harvest." Green Pool said the main reason for the sharp reduction in the 2016/17 deficit was an upward revision of 1.73 million tonnes to production in Pakistan. Global sugar production in 2017/18 was forecast to increase by 10.65 million tonnes, or 6.0 percent, to a record 188.43 million tonnes.
"High prices have strongly boosted production for 17/18, and the market is moving from a second year of small deficit (16/17) into a sizeable surplus on current forecasts," Green Pool said. Raw sugar futures rose sharply last year, peaking at a more than four year high of 23.90 cents a lb in October 2016. The market has subsequently retreated and slumped to a 16-month low of 12.53 cents earlier this week.
"Prices continue to react not just to a less tight than expected situation in 2016/17, but also to a looming substantial surplus in 2017/18," Green Pool said. Global consumption was forecast to rise by 2.55 million tonnes, or 1.42 percent, in 2017/18 to 181.87 million. Green Pool said consumption had been curbed by high domestic prices in many countries, health concerns, sugar taxes and inroads made by corn syrups and non-nutritive sweeteners.
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