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GLOBAL: Sugar supplies to remain tight - Rabobank

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Analyst group Rabobank has said that sugar supplies will remain tight in 2012, as stronger demand from China and depleted stocks in many countries weigh against forecasts for higher overall production.

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The global sugar surplus should increase moving into 2012, but prices are not expected to fall sharply, Rabobank said in a note today (6 December). Its outlook covers the current crop year, to the end of September 2012. 

Even if production increases as expected, the bank said: "The global stocks/consumption ratio would still be significantly below its ten-year average level, indicating that the market would remain relatively tight." In addition, China is expected to have to continue importing sugar in 2012, which will put a greater strain on global supplies.

According to Rabobank, by the end of the current crop year, stronger production in the EU, India and Russia is expected to send global sugar stocks to their highest levels for four years, although slightly below the ten-year average. Separately, the bank said that the recent floods in Thailand are not expected to seriously impact global sugar supplies. 

Several international agencies and consultancy groups have forecast that companies will have to get used to greater volatility in food commodity markets. A report published last month by McKinsey & Co showed that commodity prices have risen by 147% in real terms since the beginning of the 21st Century, wiping out all successes in reducing prices in the previous Century.


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