FAO/GIEWS - Food Outlook No.3 - June 2001 p. 13

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World sugar consumption will exceed sugar production in 2000/01 as reductions in output are recorded by several major sugar producing countries. An important factor in the decline was the reaction by sugar exporting countries to extremely low world market prices recorded in 1999/2000 (a 14 year low was reached in February 2000). Adverse weather accentuated some of the declines. World production in 2000/01 is expected to reach 129.4 million tonnes, down nearly 5 percent from 1999/2000 levels, while global consumption is forecast to be 130.7 million tonnes. The apparent supply deficit, coupled with increased import demand in several key consuming nations, has contributed to stronger world prices in past months.

Production Outlook

Revised forecast of world sugar production by FAO for 2000/01 stands at 129.4 million tonnes (raw value), 200 000 tonnes less than the preliminary forecast in November 2000, and 6.4 million tonnes less than world sugar output in 1999/2000. Most of the decline in production that has occurred was due to structural adjustments in production as a result of extremely low world sugar prices. Adverse weather conditions and harvest delays, particularly in developing countries, have further diminished global production outlook. Output among developed countries has been revised upward by 80 000 tonnes, but a further reduction of a million tonnes from preliminary forecasts made in November 2001 for developing countries has more than offset this gain.

Revised forecast of sugar production in developed countries, although slightly higher than preliminary estimates made in November 2000, at 41.8 million tonnes still represents a 5.4 percent or 2.4 million tonnes decline from levels attained in 1999/2000. The largest declines occurred in Australia (a reduction of 1.08 million tonnes), the EC (900 000 tonnes) and the United States (500 000 tonnes). Gains in other developed countries, particularly Poland and South Africa were insufficient to offset these losses. Production forecasts for 2000/01 indicate a 50 000 tonne increase in the Russian Federation and 238 000 tonnes in Poland, as better than anticipated processing campaigns resulted in higher output, while in South Africa favourable weather would result in production increasing by 100 000 tonnes.

The revised forecast for 2000/01 for developing countries, at 87.6 million tonnes, represents a 4.4 percent decline in sugar production compared to the 97.1 million tonnes produced in 1999/01. The reduction is largely due to a combination of production adjustments and adverse weather that occurred in Brazil as sugar output is expected to be reduced by 2.5 million tonnes and in China where sugar output is forecast to be 1.05 million tonnes less than in 1999/2000. Several factors were responsible for the decline in China including the continued reduction in planted area as milling rationalization continues, extremely dry weather during planting, and in some provinces prices on offer favoured grain rather than sugar production. Adverse weather in other developing countries is also expected to accentuate reductions in sugar output.

Total production in Latin America and the Caribbean for 2000/01 is forecast at 37.1 million tonnes, a 7.3 percent reduction from 1999/2000. Sugar production for Brazil in 2000/01 is forecast at 17.3 million tonnes nearly 13 percent less than output in 1999/2000. Severe weather conditions and heavy rains disrupted harvest and cane milling in Cuba while adverse weather conditions and a strike in the industry resulted in the reduction in Mexico. Output in Cuba is forecast to decline by 500 000 tonnes to reach 3.5 million tonnes, and in Mexico output is expected to be reduced by 170 000 tonnes to reach 4.9 million tonnes.

The outlook for sugar production in Africa in 2000/01 remains unchanged from the 4.7 million tonnes produced in 1990/2000. Production in Mauritius recovered by 120 000 tonnes from its weather affected 1999/2000 harvest. Production declines of 100 000 tonnes in Kenya is expected to be offset by slightly increased output forecast for Ethiopia. Better than anticipated output in Turkey and Egypt has resulted in a 600 000 tonne increase for the Near East for 2000/01, and nearly 11 percent higher than 1999/2000 production levels for the region. Good crop development and higher than anticipated yields in Turkey should result in a strong sugar beet campaign. Output is estimated at 2.7 million tonnes, 23 percent higher than 1999/2000 production.

Sugar production in the Far East for 2000/01 is experiencing the most significant declines after Latin America, with reduced expectations for China, Thailand and the Philippines. Total output in the Far East is forecast at 39.5 million tonnes, 4 percent or 1.7 million tonnes less than 1999/00. Sugar production in China in 2000/01 is expected to reach 7.15 million tonnes, a decline of 1.05 million tonnes from output in 1999/01. Output in Thailand in 2000/01 is forecast to be 300 000 tonnes less than output in 1999/2000 to reach 5.4 million tonnes. In the Philippines antiquated processing equipment in the older mills continue to reduce cane to sugar yields and output is estimated to be reduced by as much as 100 000 tonnes in 2000/01 to reach 1.7 million tonnes.

World Production and Consumption of Sugar

(. . million tonnes, raw value . .)
Developing Countries
Latin America & Caribbean
Near East
Far East
Developed Countries
of which: EC
North America
Source: FAO

Consumption Outlook

World sugar consumption is forecast to increase by 1.6 percent or 2.1 million tonnes from 128.6 million tonnes in 1999/2000 to 130.7 million tonnes in 2000/01. Developing countries is expected to account for most of the increase, with an annual growth rate of 2.3 percent, largely reflecting population growth and economic recovery in the Far East. Consumption growth in developed countries remains relatively stagnant with an annual growth rate of less than half a percent.

Total consumption for developed countries is forecast to increase to 46.1 million tonnes for 2001 from 45.9 million tonnes the previous year. Most of this growth is attributable to the CIS, where consumption is forecast to increase by 85 000 tonnes to 10.1 million tonnes. Belarus, Georgia, Latvia and Turkmenistan show the highest rates of growth for developed countries, with an average growth rate of 4.8 percent for all four nations. Consumption in Europe and North America is forecast to remain fairly steady at 10.6 and 14.4 million tonnes for 2001, up 0.27 and 0.40 percent respectively.

Consumption in developing countries is forecast to increase by 2.3 percent or 1.9 million tonnes in 2001 to reach 84.7 million tonnes. India is expected to remain the largest consuming nation in the world, with consumption at 17.9 million tonnes for 2001 a yearly growth rate of 4.7 percent, slightly more than the 5-year average growth rate of 4.2 percent. Consumption growth rates for many of the countries in the Far East continue to outstrip growth rates of countries in other regions as economies of these countries strengthen further. Forecast consumption for the Far East in 2001 is 43.5 million tonnes, nearly 3 percent more than 2000, with largest growth occurring in India and China. Other significant growths are expected in Malaysia, the Republic of Korea, Indonesia and the Philippines.

Sugar consumption for countries in the Near East is forecast to grow by 2.5 percent in 2001 to 10.3 million tonnes, slightly less than the 5-year average growth rate of 3 percent. The growth rate for countries in Latin America and the Caribbean is forecast to grow by nearly 1.4 percent, for a total disappearance of 23.8 million tonnes. Consumption for Africa is forecast at 7 million tonnes in 2001, with an estimated growth rate slightly higher than 1 percent below the 5-year average for Africa of 3.7 percent.

Trade and Price Outlook

World sugar prices, particularly for raw sugar, strengthened as a result of forecasts of a deficit supply situation in 2000/01 and the continued recovery in the economies of major sugar importers in the Far East and the Russian Federation. World sugar prices, having reached 14-year lows in February 2000, recovered nearly 80 percent to an average 10 cents in September 2000. Some of this recovery has eroded in recent months as supply deficits for several producing countries were smaller than earlier forecast. Prices for raw sugar have been fluctuating between 8 and 9 US cents per pound in recent months. Price strengthening during 2000/01 was largely limited to the raw sugar market, as white sugar prices remain fairly depressed due to larger than anticipated EC beet sugar production and high stocks levels concentrated in the largest consuming countries, particularly India. An estimated 10 million tonnes of world stocks are concentrated in India, while the bulk of the rest of the world surplus is concentrated in other major importing countries.

Early reports indicate that reduced sugar output in 2000/01 in major world producing countries, such as Brazil, Australia, Thailand and China, is expected to recover in 2001/02 year. However, while expectations of additional purchases of world market sugar by China to increase domestic stocks in that country may result in continued near term price strengthening, the outlook for increased global production may provide the basis for potentially weaker world sugar prices in the new year.

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