The global sugar market is expected to have a second year of small supply surplus in 2022/23 (October-September) as high benchmark prices and good weather boost crop prospects in the main producing countries, according to a report by CovrigAnalytics.
The report said that production will outpace demand by 0.9 million tonnes in the new season that starts in October, after a surplus of 0.6 million tonnes in 2021/22.
CovrigAnalytics said that the current and the next surpluses are small considering historical data. In the 2017/18 season, for example, the world produced 12 million tonnes more than it consumed, it said.
"Global demand could have been higher if the COVID pandemic had not been extended over two full seasons already," the report said, expecting consumption in 2022/23 to be 5.15 million tonnes larger than seen before the pandemic in 2018/19.
Sugar Production Outlook
The analyst projects another large sugar production in Thailand at 10.65 million tonnes in 2022/23 as well as an increase in Brazil's centre-south to nearly 34 million tonnes. It sees smaller production in India at 30.9 million tonnes, with other major producers little changed.
The report cited some potential negative factors for prices going forward, such as a likely larger crop in Brazil if rains continue towards February and March. The ongoing spread of coronavirus variants also pose a threat to consumption.
On the positive side for prices, it sees a potentially smaller crop in Europe as some producers cut beet area due to lower beet prices guaranteed.
The analyst also said macroeconomic signals are likely to remain supportive with high energy prices and inflation.