Global sugar prices to fall 19% by 2013 – Rabobank
However, forecasts for Europe and the US do not look so bright.
Global sugar prices averaged at $24.6 per lb during the first quarter (Q1) of 2012 and are expected to drop to $20 per lb by Q1 2013, a 19% fall.
The estimates came in Rabobank’s Agri Commodities monthly update issued this week.
Rabobank slightly lowered its price forecast for the current quarter by $0.7 per lb as global supply and demand for the 2011/12 season showed a 8.1 million tonne surplus.
A further 4.6 million tonne surplus is expected for the 2012/13 season.
The raw sugar contract in NY has fallen 17% since the start of April, while the domestic price in Brazil has also dropped 12%.
EU: quotas pressuring prices
Though the down-surge in prices has seen a spike in demand from China, the picture does not seem as rosy in developed markets.
“The EU has also increased their domestic needs in the past month but adjustments to the global balance sheet are not enough, relative to the forecast surplus to have an impact on international prices,” said Rabobank.
The European Commission recently reclassified 250,000 tonnes of out-of quota sugar for domestic sale at a reduced levy.
The move followed calls from The Association of the Chocolate, Biscuit and Confectionery of Europe (CAOBISCO), the industry body representing companies such as Nestle and Kraft, and European Sugar Users (CIUS) to allow further imports.
However, Rabobank said the sale of the additional 250,000 additional tonnes was four times over-subscribed.
US: supply down
In the US, sugar supply is projected down in fiscal 2013 by 2.4% due to lower imports, according to the United States Department of Agriculture (USDA) in its May ‘Sugar and Sweeteners Outlook’.
Meanwhile, total US sugar use is up 1%, it said.
The US Senate and House Agriculture Committees recently voted to advance the 2012 Farm Bill without amending current sugar policy much to the dismay of some trade associations such as the Coalition for Sugar Reform that say higher sugar prices in the US were making food companies relocate jobs overseas.
New York no 11 sugar prices for July ‘2 currently stand at $19.80 per llb, according to Sugaronline.