THIRD ESTIMATE OF WORLD SUGAR PRODUCTION 2014/15

摘要

Global sugar prices continued to drop in recent months as sugar supplies remain ample. The market has even reversed back to a carry struc-ture which incentivises producers to store sugar and sell it at a later date (when prices are higher) while consumers are enticed to purchase in the nearby contracts. However, anecdotal evidence suggests that many importers have already stocked up to themaximum level in the past months on the belief that the market was already close to bottoming out at the time. While a reduced appetite from key importers in coming months would therefore be clearly bearish, there could additional downward pressure on prices arise from distress sales of Thai producers should they run out of domestic warehouse storage capacity. Making matters worse, the freefall of the Brazilian Real in recent weeks is making sugar production relatively more attractive than ethanol production for Brazilian producers as returns in domestic currency from dollar-denominated sugar sales profit from a depreciation (with this being the key reason for the correlation between the #11 raw sugar price and the value of the Real against the US dollar). In other words, the price of sugar needs to fall even further if the Real continues its decline in coming weeks in order to solve the oversup-ply problem and entice Brazilian mills to prefer ethanol production instead of sugar. It goes without saying that this is a somewhat frightening scenario for sugar producers across the globe...