According to the latest FAO estimates, world sugar production is expected to reach 177.3 million tonnes in 2012/13, an increase of 2.2 percent over the 2011/12 season. The expected growth is attributed to an overall expansion in area planted to sugarcane in response to the relatively high sugar returns witnessed over the past three seasons. In addition, higher prices encouraged the use of fertilizers and other inputs which boosted sugar crop yields. The bulk of the expansion is expected to take place in the developing countries, where production is forecast to expand by 3.2 percent, compared with a decline of about 1 percent in the developed countries. Under the current forecast, world production in 2012/13 would be more than sufficient to
11 Sugar production figures refer to centrifugal sugar derived from sugar cane or beet, expressed in raw equivalents. Data relate to the October/September season.
Figure 42. International Sugar Agreement (ISA)
10 15 20 25 30 2012 2009 2010 2011 US cents per lb. D N O S A J J M A M F J
Figure 43. Ethanol vs sugar prices in Brazil (on a US cents/lb equivalent basis)
10 20 30 40 50 2012 2011 2010 US cents per lb.
Anhydrous ethanol price World raw sugar price
allow for an increase in total consumption and a rebuilding of world inventories. The surplus is currently predicted in the order of 5.4 million tonnes, although it is likely to be subject to revisions as the season progresses.
In South America, production is anticipated to increase by 9.5 percent in 2012/13, amid generally favourable weather conditions and attractive prices. The expansion would be mainly due to output in Brazil, where the sector is set to recover significantly from the sharp fall of the previous season, to reach 38 million tonnes, 11.5 percent more than in 2011/12. Still, there remain many sources of uncertainties associated with this forecast, in particular related to weather during the 2013 harvesting season and to the ethanol/sugar price ratio, which eventually determines how much of the two products will be produced out of sugarcane. The higher the price ratio, the larger the amount
of cane converted into ethanol at the expense of sugar. The Government of Brazil already has announced that the amount of ethanol blended into gasoline will be raised back to 25 percent in 2013. The blending rate had been cut to 20 percent in October 2011, following a poor 2011/12 sugarcane harvest. Sugar production is expected to expand in Colombia, the second largest producer in the region, and to remain about unchanged in Argentina, where less than favourable weather hampered an expansion in cane production. In Central America, preliminary forecasts indicate production in Mexico will increase, sustained by relatively high sugar prices. In Guatemala, where higher than expected sugarcane yields boosted sugar output in 2011/12, no further increase is expected for the new season. In Cuba, a series of policy measures, including higher official support cane prices, is anticipated to boost output.
In Africa, 2012/13 sugar production is projected to rise on the back of largely favourable weather conditions. South Africa, Swaziland and Sudan are set to harvest larger crops, while output is expected to remain at last year’s level in Egypt. In South Africa, the largest producer in the region, sugarcane production is expected to benefit from improved climatic conditions, as compared with the 2010/11 and 2011/12 seasons when the worst drought in 20 years curtailed yields and reduced harvested areas.
In Asia, sugar output is expected to decline slightly compared to the 2011/12 marketing season, driven by a fall in India and Thailand. Relatively attractive returns in
Table 16. World sugar production
2011/12 2012/13 million tonnes Asia 67.6 67.2 Africa 10.7 11.2 Central America 12.6 12.9 South America 42.1 46.1 North America 7.6 8.0 Europe 28.7 27.2 Oceania 4.2 4.7 World 173.5 177.3 Developing countries 130.2 134.5 Developed countries 43.2 42.8
Table 15. World sugar market at a glance
2010/11 2011/12 2012/13 Change: 2012/13 over 2011/12 estim. f'cast million tonnes % WORLD BALANCE Production 165.6 173.5 177.3 2.2 Trade 54.8 52.1 52.9 1.6 Total utilization 160.9 168.6 171.9 1.9 Ending stocks 56.3 59.3 62.2 4.8 SUPPLY AND DEMAND INDICATORS
Per caput food consumption:
World (kg/year) 23.4 24.1 24.3 0.8 LIFDC (kg/year) 15.4 16.4 16.6 1.3 World stock-to-use ratio (%) 35.0 35.2 36.2
ISA DAILY PRICE AVERAGE
(US cents/lb.) 2010 2011 2012 Change: Jan-Oct 2012 over Jan-Oct 2011 Jan-Oct % 21.3 26.0 22.0 -17.0
2010 and 2011 encouraged Indian farmers to heighten their sugarcane plantings and use of fertilizers. However, below average monsoon rains during the cane’s critical growing stage is likely to have affected yields negatively, even though a return of normal rains later in the season brought some relief to crops. Still, sugar production in the country is anticipated to decline by 5 percent to 26.6 million tonnes. Estimates remain preliminary at this stage, and further reductions may be seen as the season progresses, especially if large amounts of cane are diverted from sugar to gur, a traditional sweetener made of unrefined non-centrifugal cane sugar, the prices of which have been rising. Latest estimates indicate that 2012/13 sugar output in Thailand, the world’s second largest sugar exporter, will be lower than the all-time high recorded in the previous season, as less than favourable weather conditions hindered yields. Nonetheless, sugar output is expected to remain around the average of the past two seasons, sustained by recent investments made at farm and factory levels. Propelled by an expansion in area and yields, China’s production is expected to surge in 2012/13, notably in Guangxi, China’s sugar producing province, and Yunnan, the second largest. Financial assistance as well as the subsidized inputs that sugar mills provided to farmers were major contributing factors to boost plantings. In Pakistan, prospects for sugar production in 2012/13 are positive, following recent favourable monsoon rains. Outputs in 2012/13 are also likely to increase in Indonesia and Vietnam, but may remain stagnant in Turkey and Japan.
In Europe, the outlook for the EU points to a decrease in sugar production, largely due to unfavourable weather conditions hampering beet yields, notably in France and Germany. Nonetheless, EU’s ending stocks are foreseen to return to historical levels, as about 900 000 tonnes of sugar are expected to be carried over from the 2011/12 season into 2012/13. Similarly, production is expected to fall in the
Russian Federation, as a result of delays in planting due to cold weather, in contrast with last year when a record- level crop was harvested. Losses from adverse weather conditions are also anticipated in Ukraine. In Australia, sugar production is set to rise by 12 percent, spurred by high domestic prices that have stimulated sharp increases in sugarcane area. In the rest of the world, production in the United States is forecast to surpass its 2011/12 level, sustained by increases in both beet and cane sugar outputs.