Sugar surplus stifles price
ADDRESSING local growers at a Sugar Market Outlook meeting at the Metropole Hotel on Monday afternoon, Wilmar Sugar Research and Trading's Jean-Vincent Piot held up a North Queensland Cowboys jersey.
"So you all wonder whether I have good news or bad news to tell you," Mr Piot began.
"I have some good news - the second half was very good," he said, holding aloft the jersey in reference to the Cowboys' come-from-behind victory over the Manly Sea Eagles on the weekend.
Mr Piot waved his arm towards the presentation behind him.
"We'll see for the bad news," he said.
Mr Piot said sugar production around the world had remained stable for two years and would remain the same this year, at about 180 million tonnes, meaning world production of sugar had remained in a surplus to consumption for the fifth consecutive year.
"For this year, four months ago when I came and spoke to you, (this year's surplus) was around 3.5 million tonnes," he said.
"We're now up to 5 million tonnes. So in that period, the surplus has increased. That's probably a reason why the sugar prices have gone down."
Mr Piot said that for the next year, Wilmar projected a balance between production and consumption.
"But the total amount of stocks in the world is in excess of consumption and the stocks built in the last five years have gone up," he said.
"It will not take one year of deficit to wipe the surplus."
The surplus of sugar around the world is largely due to bumper Thai and Indian crops.
Also, China has 7 million tonnes of stock.
Mr Piot said that current prices still incentivised cane acreage stabilization/ expansion in India and Thailand, which contributed to the glut.
The sugar price is about $370 a tonne.