ASEAN meeting reports on global sugar deficit and opportunities for SE Asian countries

The ASEAN Sugar Alliance says there will be a global sugar deficit of about 2.5 million tonnes in 2019-20, and prices are expected to firm following a number of years of falling prices and surplus stocks.

The prediction was reported at the fourth meeting of the ASEAN Sugar Alliance in Ho Chi Minh City yesterday.

Market analyst, futures trading and risk manager at Thailand’s MITR Phol Sugar Corp, Sasathorn Sanguandeekul, says that a deficit would occur this year mostly due to a reduction in output in major sugar producing countries, including Thailand.

“In 2019-20 with the expectation of reduction in Thailand and India, Asia should have a deficit of around 9.5 million tonnes.”

Output in Brazil, the world’s largest sugar producer and exporter, in 2018-19 “decreased to 26.5 million tonnes due to ageing canes and drought. While sugar production in 2019-20 is forecast to be around 26-28 million tonnes”.

He also noted that Brazil is still maximising ethanol production, reducing sugar output.

Meanwhile, China’s production is expected to be 11.63 million tonnes in 2018-19 and around 11.2 million tonnes in 2019-20, less than its demand. China will likely have to import around 4.5 million tonnes.

Indonesia is another deficit market. In 2018-19, it is expected to produce around 2.37 million tonnes while consumption is expected to increase to 7.11 million tonnes.

Thailand’s production will be around 14.6 million tonnes in 2018-19 and in 2019-20, due to the drought and farmers switching to other crops, its production is pegged at around 13 million tonnes.

According to industry experts, after years of surpluses in the world market, the likelihood of a deficit in 2019-20 will be an opportunity for sugar companies, including TTC Sugar.

“Sugar prices will trade back in the range of 12-13.5 cents per pound in the short run. In the long run, we estimate the range can rise to 12.5-14.5 cent due to the deficit,” said Sasathorn.

Organised by the ASEAN Sugar Alliance and TTC Group, the meeting also discussed regional trade agreements, sugar and health issues, ethanol market development, among other topics.

SOURCE: Vietnam News