During the second half of 1996 world sugar prices declined under pressure of forecasts of a surplus for the third consecutive year in 1996/97. However, the downward trend in prices eased towards the end of the year and in early-1997. Fresh demand from some importing countries supported a price recovery which lasted until April 1997. By the end of May prices weakened again, due to rising availabilities and the absence of any further significant increases in import demand. The International Sugar Agreement (ISA) daily price declined from an average US cents 12.81 per lb. in July 1996 to US cents 10.69 per lb. in January 1997, reaching a three-year low of US cents 10.20 per lb. on 24 January. During the first four months of 1997 the ISA price averaged US cents 10.98 per lb, more than 12 percent below the same period in 1996.
FAOs world sugar production estimate for 1996/97 is 122.5 million tons raw value, slightly below the record of 122.9 million tons set in 1995/96. The decline reflects reduced output of cane sugar, currently estimated at 86.4 million tons, 1 percent less than 1995/96, while beet sugar production is forecast to increase slightly by 1.1 percent to 43.5 million tons. In Latin America production is estimated at about the same level as in 1995/96. A 3 percent increase in output to 14.1 million tons is
expected for Brazil due to favourable weather conditions and an expansion of area under sugarcane. Production in Mexico is estimated at about 4.6 million tons as drought damage was not as severe as initially forecast, while in Cuba output is estimated at 4.4 million tons , some 100 000 tons below the level produced in 1995/96, partly due to hurricane damage.
WORLD PRODUCTION AND CONSUMPTION OF SUGAR
|(. . million tons, raw value . .)|
|of which: EC||(17.2)||(17.9)||(14.3)||(14.3)|
A 5 percent fall in production
in the Far East to 36.8 million tons was almost entirely accounted for by reductions
in India. The oversupply in 1995/96 in that country caused by the record production
of about 17.9 million tons, resulted in low prices and delayed payments to growers.
The subsequent shift to substitute crops such as cereals and cotton are expected
to lead to a 13 percent decline in production to 15.6 million tons. Output in
China, on the other hand, is expected to increase by 1.5 percent to 6.4 million
tons, following the governments new investment in the sugar sector, while
output in both Thailand and the Philippines are expected to remain at 1995/96
levels of 6.4 and 1.8 million tons respectively.
Increased production is also expected in Africa: South Africa is forecast to produce 2.4 million tons and Zimbabwe about 500 000 tons, both representing an increase of about 10 percent. In Mauritius, an expansion in area under cane would result in an upturn of 9 percent to 625 000 tons.
In Oceania, continued expansion in harvested areas in Australia should result in a 9 percent increase to 5.6 million tons, while production from Fiji is expected to remain stable at about 500 000 tons. Beet growing areas in Europe and in North America benefited from good autumn rainfall. However, lower cane production in the United States, particularly in Hawaii, is expected to cause a slight decline in the overall production. Adverse weather, coupled with continued economic problems, are expected to result in a smaller crop in the CIS, particularly in the Ukraine and the Russian Federation, where production is estimated at 3.0 million tons and 1.8 million tons, respectively.
World sugar consumption in 1997 is forecast to rise by 2.1 percent to 120.6 million tons raw value, 2.5 million tons up from FAOs revised figure for 1996. An estimated increase of 3.6 percent in consumption is expected in Asian developing countries, reflecting the leading role of that region in the expanding global market. In India, ample availabilities, lower domestic prices and population growth are expected to increase consumption by 4.5 percent to about 15.1 million tons. Larger soft drinks consumption is boosting sugar utilisation in China and Indonesia, with consumption forecast at about 8 million tons and 3 million tons, respectively. The rising trend in consumption in Asia is expected to be maintained due to increasing incomes, population growth and due to the relatively low, though rising, per caput consumption levels.
Similarly, population growth and lower domestic prices should contribute to the 1.7 percent estimated growth in demand in Latin America, particularly in Brazil, in 1997. However, a decline in per caput consumption is expected in Mexico due to reduced purchasing power. Demand in Africa is expected to grow in line with population trends with little change in per caput consumption levels.
Demand in developed countries appears to be relatively stable, with consumption in the EC and North America forecast to remain at 1996 levels and some growth expected in Eastern Europe, particularly in Poland, due to lower domestic prices.
Global (gross) import demand for sugar during 1996/97 is forecast to decline by about 4 percent to 31.5 million tons, the bulk of the decline being a result of the increased domestic availability in Europe, namely in the EC and Eastern Europe. Import requirements of the Russian Federation are estimated at 3.3 million tons with the share of raw sugar increasing following the recent imposition of a 25 percent import tax on whites, aimed at revitalising the refining industry. Chinas imports are projected at 1.9 million tons, slightly below the 2 million tons imported in 1996. The United States would also remain a major importer, with an estimated import of 2.3 million tons.
As a consequence of surplus for the third consecutive crop year in 1996/97, world sugar stocks are expected to rise by about 1.8 million tons, or 4 percent by the end of the season, resulting in a stock-to-consumption ratio of nearly 40 percent.