Global sugar production for in the 2017/18 marketing year (MY) 2017/18 is expected to rise by 13 million tons (raw value) to a record 185 million, the U.S. Department of Agriculture (USDA) said, upping its May forecast.
If reached, production would be 20 million tons higher than the 5-year low just 2 years earlier, the USDA said in a report, adding that record production in Brazil, expected recoveries in output in India and Thailand due to favourable weather, the end of production quotas in the European Union (EU), and area expansion in China are all contributing factors.
“The jump in production supports record exports and consumption at 62 million and 174 million tons, respectively. Ending stocks are forecast up 5 percent as higher stocks in the EU and India more than offset lower stocks in China,” the report said.
2017/18 sugar overview
U.S. production is forecast down to 8.0 million tons due to slightly lower beet and cane sugar expectations. Imports are expected to rise 14.3 percent to 3.4 million with Mexico supplying nearly one-half. Consumption is forecast up slightly and stocks relatively flat.
Brazil’s production is forecast to rise 1.1 million tons to a record 40.2 million based on favorable weather, improved crop management, and lower use of cane for ethanol. Exports are projected up 1.1 million tons to a record 29.6 million on greater exportable supplies and despite China’s safeguard measure to limit sugar imports from Brazil. Consumption is up slightly while stocks are flat.
India’s production is forecast to rebound by 25 percent to 27.7 million tons due to higher area and yields in Maharashtra, Uttar Pradesh, and northern Karnataka. Imports are forecast lower while consumption is forecast to edge higher and close to the record seen in 2015/16. Stocks are expected to be more than sufficient to meet India’s 3-month consumption requirement prior to the start of next season’s harvest.
Production in the European Union is forecast to jump 3.6 million tons to a record 20.1 million on higher area and yields. Exports are forecast to rise a whopping 60 percent to 2.5 million tons on greater exportable supplies. Consequently, imports are down over one quarter and stocks grow; however, consumption is projected flat. MY 2017/18 is the first year that the EU sugar market will function without the 50-year old production quota regime and export limits. Production and export restrictions were lifted on October 1, 2017, as the EU sugar production quota system came to an end.
Thailand’s production is forecast to expand 1.2 million tons to 11.2 million, recovering from 2 years of drought, as favourable weather conditions are expected to improve yields. Exports are forecast to rise a similar amount on greater available supplies. Although non-alcoholic beverage manufacturers are expected to reformulate their products in response to the new excise tax on sugar-sweetened beverages, overall sugar consumption is forecast down only marginally.
China’s production is forecast to rise 1.2 million tons to 10.5 million, with expanded sugarbeet and sugarcane area. Ending stocks continue to be drawn down after reaching burdensome levels 3 years ago. Lower carry-in stocks, higher production, and slightly higher consumption, coupled with a safeguard measure on sugar imports, are all expected to constrain imports (see article below).
Pakistan’s production is forecast up 6 percent to a record 6.5 million tons reflecting higher area, favorable weather, and improved yields. Given the recent enactment of subsidies, exports are now forecast at 500,000 tons. Consumption is forecast up 300,000 tons with forecast record stocks given the expansion in available supply.
Mexico’s production is forecast slightly higher at 6.5 million tons. However, exports are projected to jump 20 percent to 1.5 million tons with most of the exports going to the United States. Stocks are lowered 18 percent, in line with higher exports and consumption. Russia’s production is forecast up 200,000 tons to a record 6.4 million on higher yields. Consumption is forecast to rise as a result of the boost in available supplies.
Australia’s production is forecast down only 300,000 tons to 4.8 million as the tropical cyclone that hit the northern growing areas of the Queensland coast in March 2017 was less damaging than expected. Exports are expected to be commensurate with lower exportable supplies.