World sugar consumption in 2000/01 is forecast by FAO to exceed global sugar production for the first time in 7 years. However, this development is not a consequence of an acceleration in consumption growth, but rather of a decline in production. Preliminary forecasts indicate a reduction in world sugar output of 4.5 percent, which should contribute to a continued strengthening in prices. International Sugar Agreement (ISA) average daily prices, which reached fourteen-year lows in February 2000, have recovered by nearly 80 percent to an average of US cents 10.03 per pound in September 2000.
FAO's forecast for world sugar production in 2000/01 is 129.6 million tonnes (raw value), 6.2 million tonnes less than in 1999/2000 with the reduction shared almost equally between the developed and the developing country groups.
Sugar output, in the developed countries in 2000/01, is forecast at 41 million tonnes, which would be 3.1 million tonnes, or 7 percent less than in 1999/2000. The increase forecast for South Africa would be insufficient to offset major declines in the EC (-1.7 million tonnes), Australia (-781 000 tonnes), the United States (-538 000 tonnes), and the CIS (-210 000 tonnes). Adverse weather, accounted for most of the declines in these countries and in Australia, a high incidence of disease also affected the crop. On the contrary, in South Africa, an expansion in crop area and favourable weather conditions should lead to an expected record output of 2.7 million tonnes in 2000/01.
Sugar production in the developing countries is also expected to decline by more than 3 million tonnes, or 3 percent, in 2000/01 to 88.6 million tonnes, almost entirely due to a sharp reduction forecast for Brazil. Sugar output in Latin America and the Caribbean is forecast at 36.4 million tonnes for 2000/01, down 9 percent from 1999/2000 levels. Production in Brazil is expected to decline by 3.8 million tonnes, or 10 percent in 2000/01 to reach 16 million tonnes. Apart from the decline in output caused by adverse weather, higher oil prices are expected to encourage greater utilization of cane for alcohol production, and therefore significantly reduce sugar export availability in that country. Output in Cuba is expected to increase by 200 000 tonnes to 4.2 million tonnes, in part due to a continuation of the programme to improve milling efficiency, while in Mexico output is expected to remain steady at 5 million tonnes, as marketing difficulties continue to plague the industry. Production levels have increased rapidly over the last 5 years in anticipation of significant exports to the United States under NAFTA. However, the expected growth in demand did not materialize leaving Mexico with a significant supply surplus.
Sugar production in Africa is forecast to increase by 100 000 tonnes to reach 4.8 million tonnes in 2000/01, mostly accounted for by the 120 000 tonnes recovery in output in Mauritius. Sugar production in the Near East is expected to remain steady at 5.2 million tonnes in 2000/01. In Turkey, despite a reduction in crop area, high yields maintained production at 2.2 million tonnes. Output in Egypt is expected to reach 1.3 million tonnes in 2000/01, similar to sugar production in 1999/2000.
Sugar production in the Far East in 2000/01 is forecast at 41.7 million tonnes, 1 percent more than in 1999/2000, almost entirely accounted for by an increase in India, where a second consecutive year of record production is forecast. Output in India is expected to reach 20 million tonnes in 2000/01, despite reports of record domestic stocks reaching 10 million tonnes at the beginning of 2000, prompting the industry to step up export marketing efforts. However, financial and logistical constraints may limit export volumes to an estimated 1 million tonnes. Production in China is forecast at 8.4 million tonnes, slightly more than in 1999/2000 when frosts reduced yields and overall output. Sugar stocks have declined considerably over the past two years, and reports of increased import demand from China supported upward movements in world sugar prices earlier in 2000.
|(. . million tonnes, raw value . .)|
|Latin America & Caribbean||40.1||36.4||23.5||23.8|
|of which: EC||(19.1)||(17.4)||(14.4)||(14.4)|
FAO estimates indicate that world sugar consumption should increase by 2.2 million tonnes in 2000/01, from 128.6 in 1999/2000 to 130.8 million tonnes, representing a global growth rate of almost 2 percent. The developing countries would account for most of the growth in consumption, reflecting economic recoveries in the Far East.
Consumption in the developed countries is expected to remain relatively stable with an estimated growth rate of less than 1 percent, from 45.9 million tonnes in 2000 to an expected 46.1 million tonnes in 2001. The CIS would account for most of the growth offsetting slight declines in non-EC countries of Europe. Consumption in the CIS is expected to reach 10.1 million tonnes, while in the EC and North America consumption is expected to remain unchanged at 14.4 million tonnes and 10.6 million tonnes, respectively.
Among the developing countries consumption is estimated to increase by more than 2 percent to 84.8 million tonnes in 2001. The most rapid growth would occur in the Far East as countries continue to recover from the economic crisis affecting the region from mid-1997. Aggregate consumption in the Far East in 2001 is forecast at 43.6 million tonnes, up by more than 3 percent from 2000. Most notable recoveries in consumption are expected in Malaysia and the Republic of Korea. India is expected to remain the world's largest sugar consuming country, with forecast consumption for 2001 at 17.9 million tonnes. Sugar consumption in Pakistan is expected to increase slightly in 2001 to 3.35 million tonnes, with lower than anticipated production most likely resulting in increased imports.
Sugar consumption in the Near East is forecast to grow by nearly 3 percent in 2001 as total disappearance should reach 10.3 million tonnes, while growth rates for countries in Latin America and the Caribbean, as well as Africa are expected to be slightly higher than 1 percent. Consumption in 2001 is estimated at 23.8 million tonnes in Latin America and the Caribbean, and 7 million tonnes for Africa.
Continued economic recovery in key consuming countries in the Far East and the Russian Federation should lead to an increase in global sugar consumption, reduced stock levels, and continued recovery in world sugar prices for most of 2000/01. However, it is important to note that reduced supplies are largely due to adverse weather conditions particularly in Brazil, the EC and Australia, rather than rationalization policies adopted by producing countries, or other structural changes in the world sugar market.