Calcutta: The one million tonne decrease in sugar stocks projected for 1998-99 is "only slightly bullish for the world sugar markets, given the slack import demand and the potential for increased cane sugar supplies", according to the latest report of the US Department of Agriculture (USDA).However, some improvement in world prices is expected from the European Union's (EU) possible cutback in beet sugar acreage and Russia's lowering of import duties. Cutbacks in EU's sugarbeet area followed sharp drops in world prices for refined sugar in the middle eighties and the early nineties, the report notes.Price of sugar at London in dollars per tonne has been declining for the last two years with the average price for 1996 and 1997 at $366.79 and $315.80 respectively. In 1998, the price ranged from $298.01 in January 1998 to $221.52 in September 1998.
Russia's import needs have been projected at 3.7 million tonnes in 1998-99 against 3.8 million tonnes in 1997-98 and world prices are likely to harden whileRussia is in the market, the report predicts. Russian import duties, which are 45 per cent for refined sugar and 75 per cent for raw sugar, were put in place with an end of December 1998 expiration.
USDA has projected that world sugar production in 1998-99 will increase by 0.9 per cent over 1997-98 to 126.5 million tonnes. The 1.1 million tonne increase in production is projected from higher output in Brazil, India, Turkey and South Africa, "more than offsetting lower output from Australia, the Philippines, Indonesia, Europe and Mexico", the report states. Sugar consumption is projected to increase by 0.4 per cent to 127.5 million tonnes, the smallest increase in five years. "Nevertheless, world imports are projected to decrease by two per cent, mainly on slack import demand in the US, South America, Ukraine and India," the report forecasts. It observes that exports will increase from South Africa (up 21 per cent), remain strong from Brazil (at 7.2 million tonnes) and decrease from Mexico (down 22 percent) and the European Union (down 13 per cent).
Significantly, export growth has outpaced increases in production of sugar in Brazil over the last six years. The USDA report states that production increased from 9.8 million tonnes in 1992-93 to the projected 16.6 million tonnes in 1998-99 while exports tripled during the period from 2.4 million tonnes to the projected 7.2 million tonnes in 1998-99.
South Africa has more than doubled production in the last six years from 1.2 million tonnes in 1992-93 to 2.7 million tonnes projected in 1998-99. Its exports have grown to projected 1.4 million tonnes in 1998-99 from "negligible" quantities reported five years ago. Australia's sugar exports, which touched 4.6 million tonnes in 1997-98, are expected to decrease in 1998-99, as a result of lower production due to adverse weather conditions, the report points out.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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