Bumper crops and lower imports by major consumers Russia and China will help sugar prices to fall further in the 2012/13 marketing year, consultant Jonathan Kingsman said on Wednesday.
Sugar prices are hovering around two-years lows as favourable weather in top producers Brazil and India raised expectations for an increase in output, and the global surplus.
China, the world’s second-biggest consumer, is unlikely to import sugar in the marketing year that starts on Oct. 1 as local production jumps on the back of high d o mestic prices and favourable weather for cane, t he head of Swiss-based consultancy Kingsman SA told Reuters.
Russia is also likely to skip imports due to a surplus from last year’s crop, he added.
“Two major importing nations, China and Russia, are expected to be absent from the world market in 2012/13 and naturally it will have a softening impact on global sugar prices,” Kingsman said on the sidelines of the India Kingsman sugar conference in New Delhi.
“The absence of Chinese import demand is a latest assessment, while Russian demand has already been factored.”
October raw sugar futures in New York rose 1.03 percent to 19.64 cents per lb by 1019 GMT, after hitting a two-year low for the front month of 18.81 cents last week.
China’s sugar output is likely to rise 10.4 percent to 13.8 million tonnes in 2012/13, while Russia’s production is likely to be broadly flat at 5.43 million tonnes, Kingsman said.
Australia, the third-biggest raw sugar exporter, could raise its production to 4.6 million tonnes in 2012/13 from 3.86 million tonnes, he added.
Sugar output in Brazil’s centre-south region, which accounts for 90 percent of the country’s cane output, is expected to rise to 31.7 million tonnes against 31.3 million in the current year to end-September.
India, the world’s second-biggest sugar producer, is likely to produce a surplus for a third straight year in a row in 2012/13.