As 2017 draws to a close, international sugar prices are struggling to reach US14 cents a pound, having started the year at almost US19 cents per pound as the 2017/18 international crop year remains on track for a surplus, according to Rabobank’s latest Global Sugar Quarterly.
The report says the 2017/18 surplus, forecast by Rabobank to reach 4.3 million tonnes raw value, could be followed by a second surplus in 2018/19, according to preliminary supply/demand balances.
In Australia, final raw sugar production for the season is expected to be 4.5 million to 4.6 million tonnes, around six per cent down on the previous year.
Rabobank commodity analyst Georgia Twomey said the expected surplus had caused sentiment in the market to deteriorate and raw sugar futures take an abrupt tumble, which was also likely to have been prompted by the strength of the US dollar and comparative weakness of the Brazilian real.
Given the decline in the market and the current outlook, Ms Twomey said pricing pressure was expected to be heavy in the near-term if the market returned close to US15 cents a pound.
With the harvest drawing to a close in Australia and expected to be wrapped up by the end of 2017, Ms Twomey said around 33 million tonnes of cane were crushed this season – down by more than nine per cent on last year’s decade high.
“While sugar recovery progressed very well through the early part of the crush, the November rains impeded progress and adversely impacted commercial cane sucrose levels,” she said. “As such, sugar output has been revised from earlier season forecasts, with Rabobank expecting the final raw sugar production for the season to be in the vicinity of 4.5 million tonnes.”
Ms Twomey said while the recent rainfall had some adverse effects on the sugar content towards the end of the crush, the above-average rainfall across the sugar cane regions through the last three months would help the prospects for the 2018 crop.