The dominance of top producer Brazil in the global sugar market is fading as the first surplus in four seasons will come from more supplies in other countries including India and Thailand, according to Czarnikow Group Ltd.
Sugar supplies will outpace demand by 7.7 million metric tons in the current season for the first time since 2007-08, the company, which traded sugar in over 90 countries last year, estimates. The crop in Brazil’s main growing area has faltered while processing capacity climbed in India, Europe, China and Thailand, the world’s second-biggest shipper, London-based Czarnikow said in a statement e-mailed today.
Brazil’s role in the sugar market is “seemingly in decline, and other exporters rising in importance,” Toby Cohen, a director at the company, said in the statement. “We continue to believe that 2012 will be a better year for consumers.”
Sugar prices have fallen 11 percent this year after dropping 27 percent last year, the most in a decade. Bigger and more affordable supplies will benefit consumers and allow inventories to be rebuilt, according to Czarnikow. The number of sellers of the sweetener in the physical market is set to increase, according to the statement.
“Lower sugar prices and more availability mean producers are going to have to work harder to control their costs after three years of good prices,” Peter de Klerk, an analyst at the company, said in the statement.
Prices closer to the cost of production will probably discourage sellers from increasing output, Czarnikow said. The market will continue to focus on whether Brazil will be able to increase cane output, it said.
The crop in Brazil’s center south, the main growing region in the country, is forecast to be 509 million tons in 2012-13, up from 493.3 million tons in 2011-12, industry group Unica estimates. The record was 556.7 million tons in 2010-11, according to Unica data.
To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net
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