Kingsman sees deficit despite technical surplus in 2010/11
Published: 08/30/2010, 3:03:29 PM
Jonathan Kingsman says world demand for sugar is expected to run ahead of supplies in the first half of the new season from September despite a bumper crop in India, according to Reuters.
"That means import demand could be greater than export availability," Kingsman, head of Lausanne-based Kingsman SA consultancy, told Reuters in an interview ahead of a global conference this week. "That could be round about 1.0-1.5 million tonnes of trade flow deficit."
The London-based International Sugar Organization last week forecast that rising output in India would create a global sugar surplus of 3.22 million tonnes in the year from October, compared with a deficit of 4.95 million tonnes a year ago.
Higher global demand in the first half of the new season would encourage India to export sugar, but the country may swing back to imports in the second half when supplies improve due to harvests in Brazil, Kingsman said.
"As the Brazilian harvest is made through December and the India harvest through January and April, this can offer India a chance to maximise their income and revenue," Kingsman said.
India, which is developing refineries at some leading ports, would need 2 million tonnes of imported raws by the end of next year and 2.5 million tonnes by 2012, said Kingsman.
Brazil's port congestion, which had exacerbated tight global supplies, would run through November when harvests from the northern hemisphere would come on stream, he said.
Kingsman said vessels with 3 million tonnes of sugar were waiting at ports.
Higher-than-usual demand as many countries try to replenish stocks is causing big delays of up to 40 days for ships to load at the main Santos port of Brazil.
"For October, I would think the downside is about 17.5 cents per lb. The upside would be 23-25 cents," he said.
"Indonesia has had bad weather. There is a lot of talk of the government allowing between 200,000 and 500,000 tonnes of additional imports. The Philippines are talking about a few more imports. One big question mark is Pakistan," he said.