Rabobank Report: Sugar Quarterly Q2 2014

Rabobank has published a new report on the global sugar industry, looking at issues of supply, demand and pricing in key markets worldwide, particularly the factors resulting in an end to a global surplus.

In the report, Rabobank’s Food & Agribusiness Research team says that the global sugar market has been trading sideways in the past three months, as prices have been confined in a range between $16.5/lb and $18.5/lb. Brazil continues to send conflicting signals to the sugar market: while initial cane production estimates of 570 million tons and 32.8 million tons of sugar remain for the region, this is subject to revisions, depending on how the weather progresses in the coming months after a long dry period.

The bank says that world production overall is expected to decrease slightly for the second year in a row, suggesting that low prices during the last couple of years may finally be generating a response. Preliminary global production estimates for the 2014/15 (October/September) global balance suggest a projected deficit of 0.9 million tons raw value.

“Despite a return to a global deficit for the first time in four years, the projected deficit is currently very modest, and is not enough to materially reduce the level of year-end global stocks,” stated Rabobank analyst Andy Duff. “Nor does it look sufficient to significantly impact the global stocks/consumption ratio. For this reason, our preliminary balance for 2014/15 suggests only limited additional support for prices from fundamentals as we move from the current international crop year to a new one.”

Rabobank Group is a global financial services leader providing wholesale and retail banking, leasing, real estate services, and renewable energy project financing. Founded over a century ago, Rabobank is one of the largest and safest banks in the world, with nearly $1 trillion in assets and operations in 45 countries. In North America, Rabobank is a premier bank to the food, beverage and agribusiness industry. Rabobank’s Food & Agribusiness Research and Advisory team is comprised of more than 80 analysts around the world who provide expert analysis, insight and counsel to Rabobank clients about trends, issues and developments in all sectors of agriculture.

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