World Sugar Market Seen in Deficit for Few Years
“World production and consumption for the next 2-3 years show a reasonable chance that we will continue having deficits” as prices remain below production costs for many producers, Archer Consulting says in March 12 report.
Consumption around the world is rising faster than production, says Arnaldo Correa, partner at the Sao Paulo-based firm.
As Brazil’s average sugar-yield (known as ATR) dwindles fourth year in row, “it’s no wonder that we will have constant deficits (though small) over the next years”.
Thailand’s costs of production is 15.10c/lb, India’s - 24.47c/lb, while Australia’s is 11.90c/lb and Brazil’s 11.25c/lb, Archer estimates.
Near term, recent price rally needs validation from physical market, where demand came to a standstill since early March.
Raw sugar for May delivery rose 2% last wk to 15.13c/lb on ICE Futures U.S. in N.Y.
Rebounding Brazilian real helping sugar rally as it deters producer selling of commodities priced in greenback.