FAO/GIEWS - Food Outlook No.3 - June 2000 p. 9

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World sugar prices declined at a steady rate throughout the first six months of the 1999/2000 season (October/September) as continued growth in production and weak demand led to a build-up of surplus stocks. The International Sugar Agreement (ISA) daily price reached a 14-year low of US cents 4.70 per pound by the end of February 2000. Sugar prices began recovering in April and by the end of May had increased by more than 30 percent over the March average. This recovery was mainly due to increased import demand in several major markets such as the Russian Federation, Bangladesh, Pakistan and Indonesia, combined with early forecasts of potentially reduced sugar production in 2000/01.

FAO's estimate of global sugar production for 1999/2000 is 134.3 million tonnes (raw value), an increase of more than 2 percent over 1998/99, mainly due to a 5 percent expansion in output in developed countries. Larger harvests in the European Community (EC) and the United States contributed significantly to this growth. Production in developed countries is estimated at 44.2 million tonnes, while output in developing countries, is expected to increase slightly (less than 1 percent) to reach 90.2 million tonnes.

Production in Latin America and the Caribbean is forecast at 40.1 million tonnes, 1 million tonnes more than in 1998/99, largely attributable to increased production in Brazil and Cuba. In Brazil, deregulation of the sugar and alcohol complex, which started in the late 1980s and concluded in 1999 with freely floating prices, resulted in significant industry consolidation and increased utilization of cane for sugar processing, most of which has been channeled into export markets at very competitive price levels. Production in Brazil is expected to increase by 300 000 tonnes to reach 19.8 million tonnes. In Cuba, following an improvement in mill efficiency, output should reach 4 million tonnes, 400 000 tonnes up from the previous year. Sugar production in Mexico is estimated to remain stable at 5.1 million tonnes, despite worse than anticipated weather conditions and a delay in crushing due to a strike by sugar mill workers.

Output in Africa (excluding Near East in Africa) in 1999/2000 is forecast at 4.7 million tonnes, about 100 000 tonnes more than that achieved in 1998/99 despite reported production decreases in several major sugar producing countries. The most significant increase is expected in Kenya where output should expand by 28 percent to 600 000 tonnes. In South Africa, the largest producing country in Africa, output is forecast to decline slightly, by 70 000 tonnes to 2.5 million tonnes. Adverse weather is forecast to reduce output in Mauritius by 27 percent to reach 500 000 tonnes. This is expected to pose problems for the country in fulfilling its export quota to the EC for 1999/2000.

Sugar output in the Near East is estimated to decline by 9 percent to 5.2 million tonnes, primarily due to a reduction of 600 000 tonnes in output in Turkey where production quotas have been introduced in an effort to reduce domestic stocks. In addition, a quality-based pricing policy has been introduced to improve field productivity and extraction efficiency. Output in Egypt is forecast to expand by 11 percent, primarily due to an increase in area planted to sugarbeet. Sugarcane production still dominates at an estimated 1.1 million tonnes, while sugarbeet output is expected to reach 250 000 tonnes.

The latest estimate of sugar production in the Far East in 1999/2000 is 39.7 million tonnes, a downward revision of 1 million tonnes from FAO's first estimate issued in November 1999. The revision was prompted by a further reduction in estimated output in China due to frosts in the southern cane production areas in December 1999. Output is expected to decline by 13 percent to 7.9 million tonnes. Also contributing to the downward revision is a 22 percent decline in sugar output expected in Pakistan. Lower yields due to insufficient rain during the monsoon season, as well as delayed government payments to sugarcane growers encouraged a shift towards alternative crops.

World Production and Consumption of Sugar

  Production Consumption
1998/99 1999/2000 1999 2000
  (. . million tonnes, raw value . .)
WORLD 131.4 134.3 126.1 128.6
Developing Countries 89.5 90.2 80.4 82.8
Latin America & Caribbean 39.1 40.1 23.0 23.5
Africa 4.6 4.7 6.7 6.9
Near East 5.7 5.2 9.7 10.0
Far East 39.8 39.7 40.9 42.2
Oceania 0.4 0.5 0.1 0.1
Developed Countries 41.9 44.2 45.7 45.9
Europe 21.9 23.1 19.7 19.7
of which: EC (17.5) (19.1) (14.4) (14.4)
North America 7.6 8.3 10.4 10.6
CIS 3.9 3.9 10.0 10.0
Oceania 5.0 5.5 1.2 1.2
Others 3.5 3.4 4.3 4.3

FAO's forecast of world sugar consumption for 2000 is 128.6 million tonnes, an increase of about 2 percent from the previous year. Sugar consumption in the developing countries would be 82.8 million tonnes, while consumption in the developed countries would increase slightly to 45.9 million tonnes. Consumption levels are expected to remain steady in the EC, and increase slightly in the United States.

Sugar consumption in the Far East is forecast at 42.2 million tonnes for 2000, an annual growth rate of 3.3 percent, outpacing both the Near East and Africa, at 3.1 and 3 percent respectively. Negative consumption growth rates in 1998/99 are expected to be reversed in several countries including Malaysia and the Republic of Korea where improved economic growth should support stronger industrial demand. Sugar consumption in China for 1999/2000 is estimated at 9.1 million tonnes, slightly higher than the 8.9 million tonnes consumed in 1998/99, while in India, consumption is estimated at 17.1 million tonnes, 700 000 tonnes less than its expected production, adding to is already difficult stock to consumption ratio position.

Sugar exports from Brazil continue to dominate the world market, as low production costs and the devaluation of the real encouraged competitive export prices. Higher than anticipated imports by the world's largest sugar importing country, the Russian Federation, helped absorb some of the global stocks and provided much-needed market support throughout 1998/99. Continued low world sugar prices and high stock levels have prompted many governments to initiate measures to protect their domestic sugar industries from imports.

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