Czarnikow slashes surplus estimate
Published: 08/31/2010, 5:09:20 PM
Hopes of a return to a meaningful world sugar surplus this year have evaporated with dry weather in Russia and Thailand, Czarnikow said, warning over the rising prominence of weather setbacks, according to Agrimoney.
The sugar merchant cut by 2.6 million metric tonnes to 14.8 million tonnes its forecast for the rebound in world sugar output in 2010/11.
That leaves output, at 172.2 million tonnes, less than 1 million tonnes higher than demand in calendar 2011 - and this before making any allowance for losses to the floods in Pakistan until the extent of damage becomes clear.
"The increase in global production will now not be enough to build a surplus in the coming year," Czarnikow said in a report.
"This means the 2010/11 balance sheet is more likely to be in equilibrium than surplus."
And, on a physical basis, even this equilibrium may "prove to be illusive", given the stampede for exports from Brazil, the top sugar producer, to replace stocks drawn down as prices ran up to a 29-year high earlier this year.
"Brazilian new crop production has been drawn back to meet residual demand from the 2009/10 season," the briefing said, noting "unprecedented levels of demand" for the country's sugar supplies.
The comments come at a sensitive time in sugar markets, which have yet to fulfil expectations of a surge in fund buying following the return of closing prices above 20 cents a pound in New York last week.