All in all the sugar market seems to be in for a difficult year in 2013. Brazil's 2012/13 CS campaign is now one for the history books, but this does not mean that its impact is negligible. In fact, output in the region came in one million tonnes higher than was forecast when crushing began in April and nearly 1.5 mln tonnes higher than in Unica's mid-season revision four months ago. While this represents 1.5 mln tonnes more sugar that needs to find a home at a time of reduced global import demand this burden is being aggravated by the fact that sugar exports from Brazil have been slow so far in the season - so the volume of Brazilian sugar that will pressure prices in coming months will be even higher. Making matters worse, this is coupled with theprospect of a surge of the 2013/14 cane crop to the highest level ever in the new crop that will already start in March. Unfavourable weather and a government move to raise the ethanol blend in gasoline and the latter's price are currently seen as the only tools that could lend support in the near term. The cane crushing campaigns in the northern hemisphere are bound to end between March and May and should give more clues as to the medium-term outlook. But even if the crops in some large-scale producers in Asia should not live up to initial expectations - with Thailand and China currently being the most likely prospects - the campaigns should still yield crops not far off historical records. While China's crop will determine the country's future import needs the Indian crop does not seem to be of that much significance this season as it will most likely not fail by such an extent that the country needs imports to meet domestic consumption while any surplus is currently not likely to enter the globalmarketing chain as world market prices are well below Indian production costs.But similar to last year, it remains to be pointed out that factors outside the influence of sugar's own supply and demand fundamentals can play a decisive role for price formation. While it seems likely that planting decisions will start to reflect the global surplus and less optimal marketing conditions for the next crops from now on it may take some time until results reduced output levels. Barring adverse weather the market seems likely to remain in surplus at least until after the 2013/14 season -which means it may be a bumpy road ahead for producers.
展开▼
