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Global sugar production falls 6.5% in 2015/16, to 174.1m mtrv (metric tonnes raw value). 2015/16 is in deficit by 11.4m mtrv, the second largest production deficit on record.
The sugar market has been in surplus for four years. This has made trading conditions difficult; prices have been declining and volatility has reduced. But is this set to change?
The rise in obesity is a problem. And it is being blamed on a rise in the consumption of sugar. However, while global sugar consumption is rising in aggregate, in the developed total world sugar consumption has been surprisingly stable.
Weather risk in the sugar market is usually seen as coming about when heavy rainfall disrupts crushing – just as we have seen in Brazil this season.
While Asian economies have high growth potential, they will become increasingly in need of the agricultural production of the west.
At first glance it looks as though sugar will be in for quiet year. However, as prices fall so too does the incentive to produce, while demand will be encouraged by rising affordability.
The global ethanol market has grown 400% in the last decade, driven by the United States and Brazil.
A summary of Toby Cohen’s presentation at Kingsman’s 5th Delhi Sugar Conference