Buoyed by a sugar consumption uptick in the US, the International Sugar Organisation (ISO) in its Quarterly Market Outlook report reviewed global sugar surplus and said it has narrowed marginally.
The deficit has widened to 3.464 mn tonnes, from 2.916 mn tonnes previously. Sugar production is seen at 181.287 mn tonnes, up 5.231 mn tonnes from last season.
What does it entail?
Industry veteran G K Sood said that over the last two years, global sugar markets have behaved unconventionally, despite a lower stock-to-use ratio, which is normally a bullish indicator, but sugar prices have softened.
He said, “This disconnect has been driven largely by speculative fund activity, which has responded aggressively to assessments of a surplus outlook. In many ways, the market has moved beyond traditional supply–demand fundamentals”.
Scenario for India
For India, Sood said that the market landscape remains status quo with no significant shifts in export availability.
The effects of the on-going geo-political skirmishes are affecting sugar exports.
“Meanwhile, key destinations that traditionally absorbed Indian white sugar, such as West Asia and Afghanistan, have effectively disappeared from the demand map. East African countries and Sri Lanka continue to require sugar, but the dynamics there are evolving as well”.
The closure of the Al Khaleej Sugar refinery market is expected to push the white sugar premium higher in the near term.
“With a lower global surplus, exporters will face increasing challenges in finding viable markets, intensifying competition for the limited pockets of demand that remain,” Sood stated.
