Sugar Quarterly Q4 2020

Rabobank’s latest sugar outlook shows a balanced market for the upcoming season. We note a change in our 2019/20 projections, now showing 1.8mmt surplus, as production prospects in Asia and Brazil have improved. Looking ahead to 2020/21, we anticipate a 0.3mmt deficit, as production increases are being offset by a 1.7% recovery in global consumption.

Report summary

Nearby sugar prices had been trading in the USc 14.5/lb to USc 15.5/lb range, as markets waited for news on India’s export subsidies while oil and the Brazilian real strengthened. But rumors, followed by confirmation on December 16, of India’s export subsidy program, coupled with rain in Brazil, may have prompted funds to reduce their long positions. Meanwhile, the second wave of the Covid-19 pandemic and renewed lockdowns are also adding uncertainties to the 2021 outlook.

On the fundamental side, Rabobank now estimates a 1.8m metric ton, raw value (mtrv) global surplus for the 2019/20 (Oct–Sep) season. This contrasts with a 1.0m mtrv deficit projected in the last Sugar Quarterly. The change is a result of higher-than-expected production, especially in Brazil, where this year’s harvest progressed at a rapid pace. Meanwhile, our consumption numbers for 2019/20 are largely unchanged, registering a 1.4% YOY drop.

Looking ahead to 2020/21, Rabobank projects a 0.3m mtrv global deficit, with gains in output being offset by a projected 1.7% YOY recovery in global consumption. Production increases are expected in Asia – particularly China, India, and Pakistan – and also in North America, as crops recover from past years’ drought. Our consumption forecasts for 2020/21 have been lowered slightly, given the second wave of the pandemic.

Points to watch going forward are the pace of Indian exports now that the subsidy arrangements are clear, the possible impact of La Niña on the Brazilian crop, and the extent to which the availability of vaccines against Covid-19 aids recovery in the global economy.

  • Andy Duff

    Head of RaboResearch Food & Agribusiness - South America; Global Strategist - Sugar
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  • Maria Afonso

    Senior Analyst – Sugar, Grains & Oilseeds
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  • Pablo Sherwell

    Lead of F&A Data Analytics - North America
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  • Charles Clack

    Commodity Analyst
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  • Lief Chiang

    Analyst - Grains & Oilseeds
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  • Stephen Nicholson

    Senior Analyst - Grains & Oilseeds
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