Asia key for global sugar demand

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Asia key for global sugar demand
Jamal Al Ghurair, Managing Director Al Khaleej Sugar

Dubai - Tightness in sugar supplies is already being felt in the market for refined sugar, where its premium over raw sugar rose to a five-month high of $117 a tonne on Friday.

By Rohma Sadaqat

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Published: Sun 31 Jan 2016, 11:00 PM

Last updated: Thu 4 Feb 2016, 11:16 AM

Asia is expected to drive the growth in global sugar demand at two per cent per annum, and help drive growth in international trade, experts at the Dubai Sugar Conference discussed on Sunday.
Pointing to the fact that annual sugar consumption is recorded as being greater than demand for the first time in over five years, experts were optimistic of the stabilisation in sugar prices, as well as a possible turn in the sugar cycle.
Tightness in sugar supplies is already being felt in the market for refined sugar, where its premium over raw sugar rose to a five-month high of $117 a tonne on Friday.
The so-called white premium is widening on stronger Chinese demand and El Nino induced delays to crops in Central America, and is also increasing profits for refiners. Global sugar imports for 2015-16 are expected to grow to a record 52 million tonnes.
Soren Schroder, chief executive of global agriculture company Bunge, told attendees at the conference that Brazil was the only origin supplier with the potential to fill the demand gap, but to do that it needed to increase annual crushing by over 200 million tonnes by 2025.
"Despite lower global crude oil prices, the market conditions for ethanol in Brazil have improved. Ethanol demand will continue to grow at a projected 40 per cent over the next 10 years. To balance global demand, Brazil will need to increase its output," Schroder said.
Sugar was one of the few commodities that rose last year after a surplus of everything from grains to metals to oil, sent prices falling the most since 2008. Prices increased five per cent in 2015, the third-best performance in the Standard & Poor's GSCI index of 24 raw materials after cocoa and cotton. Production will trail consumption by about 2.5 million tonnes in the season that started in October, reversing surpluses from the previous four years, said Kona Haque, head of research at London-based ED&F Man. Futures traded in New York have fallen 14 per cent this year partly as investors pulled out of commodities. China brought in a record 4.8 million tonnes of sugar last year and imports in 2016 could remain big as long as it's profitable for refiners, Haque said.
A surge in Indian sugar prices means the world's second-largest supplier will sell more on the domestic market and less abroad.
India will export less than 50 per cent of what the government ordered, according to ED&F Man Holdings and Olam International. While expectations for Indian exports were bearish for the market six months ago, the estimates are now being lowered.
Indian sugar prices rallied more than 30 per cent in the past five months on expectations the current crop will turn out smaller than initially forecast. The gains mean the nation's millers make more money selling their production locally.
Jamal Al Ghurair, managing director of Dubai-based Al Khaleej Sugar, predicted that the outlook for sugar in 2016 will remain much as it has in 2015.
"The world economy is at a steady stage at this moment, and I don't see any fluctuations taking place. This year will be steady and let us hope for a better 2017," he said.
- rohma@khaleejtimes.com


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