World sugar stocks will plunge in 2022-23 to an 11-year low, US officials said, as they hiked estimates for Indian exports, amid global demand growth expected to outpace the increase in production.
The US Department of Agriculture, which had in May forecast world sugar inventories shrinking by 3.54m tonnes this season, lifted the estimate for the decline to 5.93m tonnes – the largest decline since 2008-09.
The revision decreased the estimate for carryout stocks to 38.56m tonnes, the lowest since 2011-12, as demand extended its recovery from Covid lows set three seasons ago.
“Stocks are estimated lower as growth in global consumption exceeds the rise in production,” said the USDA, whose outlook contrasts markedly with expectations from other commentators of a build in world inventories in 2022-23.
‘Rise to a new record’
Consumption was seen expanding by 3.13m tonnes to 176.4m tonnes, topping a record high set five years ago, and reflecting growth in Russia, as well as major Asian markets.
“Consumption is anticipated to rise to a new record due to growth in markets such as China, Indonesia and Russia,” the USDA said.
Production, meanwhile, was seen growing by 2.80m tonnes, but remaining well short of 2017-18’s record high.
Beet vs corn
The estimate for output in Brazil was lifted by 1.7m tonnes to 38.1m tonnes, regaining the country the title of the world’s top producer, “as higher sugar cane yields from favourable weather are expected to result in additional sugar cane available for crushing”.
However, the impact was offset in part by a series of smaller downgrades to other producers, including the European Union, for where output hopes were cut by 100,000 tonnes to 16.2m tonnes.
“EU production is estimated down 329,000 tonnes [year on year]… as farmers reduced sugar beet plantings in favour of more profitable crops like corn and sunflower,” the USDA said.
The forecast for Pakistan’s output was downgraded by 120,000 tonnes to 7.1m tonnes, “due to the impacts of flooding in key production areas”.
The reduced world sugar stocks estimate also factored in significantly upgraded expectations for India’s exports, including a 3.0m-tonne hike to a 11.7m tonnes in shipments for last season,
The revision was “due to record exports following global supply shortfalls and competitive prices”, the USDA said, with India benefiting from an influx of import demand after drought and frost diminished Brazil’s 2021-22 cane crop.
For 2022-23, the USDA lifted its forecast for India’s exports by nearly 4.2m tonnes, to 9.4m tonnes, “the second highest ever”, if declining year on year thanks to reduced Indian output and enhanced competition from Brazil.
The forecast assumes Indian shipments exceeding the 6m tonnes in quota so far announced by the government.
Many commentators believe the government will issue a second tranche of quota, with the influential Indian Sugar Mills Association estimating that India could export up to 9m tonnes of sugar this season.