WORLD SUGAR MARKETJosé OriveExecutive DirectorInternational Sugar Organization

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ISO White Sugar Price Index

ISA Daily Price

A year ago world prices hit bottom

For two consecutive years world sugar balance has been characterized by statistical surplus

JULY 2019 2018/19 2017/18

Surplus (mln t) 2.141 9.726

A possible end of the surplus phase in 2019/20

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World Sugar Surplus/Deficit 2009/10-2020/21

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World Population and Sugar Consumption Growth Rates (in %)

consumption growth population growth

Linear (consumption growth) Linear ( population growth)

Recent years have shown a readable trend towards a slow but steady erosion in those rates from an average of about 2% in the mid-2000s to the current level below to 1.5%.

A considerable part of losses in consumption growth rates can be attributed to a slowing down in global population growth.

Sugar and Health debate starts taking its toll

2019/20 - growth rate close to the long term-average of 1.39%

Suggesting a 1.39% growth in world sugar use and flat world sugar production, world S&D look well balanced. But how plausible is a no-change production assumption?

Current Production(2018/19)

ConsumptionGrowth+1.39%

_________Deficit 0.3 mln t

~177.9 mln t

~177.6 mln t

2019/20

Brazil – the world’s largest sugar exporter

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Sugar export availability in 2018/19 by countries of origin (1,000 tonnes, tel quel)

Brazil – the world’s largest sugar exporter

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Brazil: sugar share in production mix, 2010/11-2019/20 (in %)

2018/19 (Oct/Sep) – 28.6 mln t+ 4.5%

2019/20 (Oct/Sep) – 29.9 mln t

2018/19 output industry’s projections:July 2018 – 35.0 mln tonnesOct 2018 – 32.4 mln tonnesJan 2018 – 30.7 mln tonnesMay 2018 – 33.0 mln tonnes

India – the world’s largest sugar producer and consumer

India – the world’s largest sugar producer and consumer

India – the world’s largest sugar producer and consumer

50 mln cane growers

Guaranteed prices for cane (2011/12 - INR1450/т USD29/t2015/16 - INR2300/т USD/38t2018/19 - INR2750/т USD41/t2019/20 - ???

... But cane prices are not correlated to sugar prices ...

Millers’ arrears to farmers (June 2019)INR190 bln (USD2.7 bln)

2.4 mln tonnes + stocks (~15 mln t – ISMA)ISMA targets 7 mln tonne exports

Production to decrease to 29 mln tonnesDeficient monsoons Cane arrears

India – the world’s largest sugar producer and consumer

March 2019 – The WTO dispute settlement body received three submissions from Brazil, Australia and Guatemala about sugar and sugarcane in India. The specific measures that are subject of the request for consultation include the fixing of Minimum Indicative Export Quotas (MIEQ), minimum selling prices (MSP) in the domestic market and increasing fair and remunerative cane prices (FRP), which is lifting production above domestic requirements.

Can ethanol reduce India’s sugar surplus?

YES, but it may take some time, particularly due to the necessity to reform the cane payment system. Ethanol production from cane priced at more than USD40/tonne is not economically viable option taking into account abundant molasses supply…

India – the world’s largest sugar producer and consumer

EU-28 – the world’s third largest sugar producer

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EU - Sugar Production and Beet Areas

Sugar Production Beet Areas

The EU crop monitoring unit MARS currently forecasts sugar beet yields at 75.4 tonne/haup 11% from 2018/19 and up 0.5% from the 5-year average.

The European Commission estimates planting area in 2019/20 to reduce by 4.6%

Improvements in yields allow us to suggest a modest rise in sugar output by about 3.5% despite a decrease in beet area.

EU-28 – the world’s third largest sugar producer

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EU Average Domestic Ex Factory Prices (EUR/tonne)

Thailand – the world’s second largest sugar exporter

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Thailand – Sugar Production and Consumption

production consumption

2018/19 output industry’s projections:Dec 2018 – 13.0-13.5 mln tonnesMay 2018 – 14.4 mln tonnes

Ending stocksSep 2016 – 4.3 mln t Sep 2019 – 6.8 mlnt

Thailand – the world’s second largest sugar exporter

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Thailand – Sugar Production and Consumption

production consumption

For 2019/20 we assume a 1.5 mln tonnes drop as poor cane prices at a time of rising prices for cassava – a key competitor for cane cultivation – are estimated to have driven farmers to switch between crops…

… but exports may be not effected as stocks are high

Production2019/20

ConsumptionGrowth+1.39%

_________Deficit 3.5 mln t

~177.9 mln t

~174.4 mln t

2019/20

However, considerable surplus stocks are still overhanging the market and still need to be absorbed before prices can return to more remunerative levels for producers.

CONCLUSIONS

High Accumulated Stocks will have to be absorbed by the market before we can see any improvement on prices.

Government policies will continue to support the sugar sector, mainly for political reasons.

The weather will play a vital role as it's the key element that could provoke variations in production and perhaps some significant reduction in global output.

The War Against Sugar will continue, it's CRUCIAL the sector communicates better and is able to convey proactive messages based on facts & sound scientific evidence.

Thank you for your attention!

www.isosugar.org28th ISO Seminar

26-27 November 2019 – London

“Sugar – it’s about people”