HSBC sees 2012/13 surplus at 5.6 million tonnes
Published: 07/02/2012, 5:25:45 PM
HSBC Holdings Plc says the global sugar surplus in the 2012/13 season starting in October in most countries will be smaller than in 2011/12, according to Bloomberg.
Sugar production will exceed demand by 5.6 million metric tonnes in 2012/13, down from about 8 million tonnes in 2011/12, Pedro Herrera, an analyst at the bank in New York, wrote in a report e-mailed Friday. Another surplus will leave sugar prices at 20 cents to 22 cents a pound, he said.
"We expect global production to again exceed consumption though the surplus this time around may be lower year-on-year," Herrera said, adding that production is forecast to decline in India, the world's second-biggest producer, and Europe and rise in top grower Brazil, Thailand, Australia and China.
A weaker Brazilian real will compensate for lower international sugar prices, he said. A lower real results in reduced production costs in dollar terms and increases the incentive to export the commodity.
"Although international sugar prices are down 16% versus the 2011/12 average, prices in Brazilian reais are actually 2% higher," he said. "We thus expect Brazilian sugar producers to continue to post strong margins from their sugar businesses."