Mumbai: After a lukewarm performance last two years, the global sugar market is showing promising signs of rebound in prices. India is likely to play a key role in lending strength to global prices. Deteriorating prospects for sugar crops in two of the world's largest producers Brazil and India, combined with the world's largest importer Russia re-foraying the market have meant that the price weakness will soon become a thing of the past. World sugar market fundamentals are set to stiffen next season. In 2007-08, world sugar consumption estimated at about 160 million tonnes (mt) is set to trail output (171 mt) by over 10 mt which will be available as excess.
Sugar output in Asia represented by India, China and Pakistan is set to be lower than in the previous year. Even in the European Union, following uncertainties relating to reforms, there exist the strong possibility of lower sugar production (from beet). As is axiomatic, in a tightly balanced commodity market, even a small change in either demand or supply or both will have a disproportionately larger impact on market prices. Deviant weather in cane growing States such as Maharashtra, Andhra Pradesh and Karnataka has created risk of yield loss. As result, the preliminary expectation of 2008-09 sugar output is 22-23 mt versus 27 mt of previous year. Indian sugar exports from 2007-08 season have already reached 3.5 mt and may potentially reach 4.0 mt.
Sugar output in Asia represented by India, China and Pakistan is set to be lower than in the previous year. Even in the European Union, following uncertainties relating to reforms, there exist the strong possibility of lower sugar production (from beet). As is axiomatic, in a tightly balanced commodity market, even a small change in either demand or supply or both will have a disproportionately larger impact on market prices. Deviant weather in cane growing States such as Maharashtra, Andhra Pradesh and Karnataka has created risk of yield loss. As result, the preliminary expectation of 2008-09 sugar output is 22-23 mt versus 27 mt of previous year. Indian sugar exports from 2007-08 season have already reached 3.5 mt and may potentially reach 4.0 mt.
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