Food Outlook No.5 - December 2002 p.13

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World sugar production forecast to increase in 2002/03

FAO's forecast for world sugar production for 2002/03 has been revised upward to account for better than expected output in several major producing countries, particularly Brazil, the EU and China. Current estimates indicate that output may reach 140.7 million tonnes, 6 million tonnes more than in 2001/02. Cane sugar should account for almost 75 percent of world sugar production in 2002/03, slightly less than in previous years, mainly due to increased beet production in the EU. A larger harvested area and higher yields due to better than anticipated growing conditions would increase output in the EU by more than 11 percent to reach 18.1 million tonnes (raw value). EU production quotas have recently been reduced by 862 475 tonnes - based on current expectations of increased output - in order to comply with WTO approved export subsidy ceilings. Production in Brazil is forecast to reach a record 23 million tonnes in 2002/03, which could result in exports approaching 13 million tonnes, particularly with the depreciated value of the real. Sugar production in Brazil has more than doubled over the decade from 1992/93 when output was slightly more than 11 million tonnes. Production increases are also forecast for China and South Africa. Output in China is expected to increase by 800 000 tonnes over initial forecasts, to reach 9 million tonnes, and in South Africa output would be larger by 12 percent to reach 2.8 million tonnes. Early estimates for Australia indicated an increase in output by 8 percent to reach 5.2 million tonnes despite unfavourable growing conditions.

Increased consumption attributable to stronger economic growth

FAO forecasts world sugar consumption to reach 136 million tonnes in 2003, an annual growth rate of 2.4 percent driven by strong economic growth, particularly in the Far East, where the countries of South East Asia recovered to pre-1997 (economic crisis) levels. Consumption is expected to grow fastest in the Far East, reaching a forecast growth rate of 3.5 percent in 2003 against a backdrop of an expected annual growth rate in GDP exceeding 5 percent and population growth rate of around 1.5 percent.

World Production and Consumption of Sugar

  Production Consumption
2002 2003
  (. . million tonnes, raw value . .)
WORLD 134.7 140.7 132.8 136.0
Developing Countries 95.1 97.9 86.2 88.9
  Latin America & Caribbean 41.5 43.5 24.1 24.4
  Africa 4.9 5.1 7.2 7.4
  Near East 4.6 5.3 10.5 10.9
  Far East 43.6 43.7 44.4 46.0
  Oceania 0.4 0.4 0.1 0.1
Developed Countries 39.6 42.9 46.6 47.2
  Europe 20.2 22.4 19.9 20.2
      of which: EC (20.2) (18.1) (14.7) (14.8)
  North America 7.4 7.5 10.8 10.8
  CIS 4.0 4.1 10.2 10.5
  Oceania 4.8 5.2 1.3 1.3
  Others 3.3 3.7 4.4 4.4

Source : FAO

Consumption in developing countries is forecast to grow by 3 percent, despite slight declines in Latin America and the Caribbean. Among developed countries, consumption is expected to grow by an estimated 1.3 percent, slightly more than in recent years due to stronger growth in the CIS, particularly the Russian Federation. The significant increase in consumption in the Russian Federation is due mainly to the expansion of its industrial use, more than offsetting the decline in the United States as sugar consuming manufacturers move to Mexico or Canada.

Record output and increased export availabilities in Brazil may result in further price erosion

World sugar prices increased in 2001 as the market reacted to reports of hurricane damage to the sugarcane crop in Cuba and reduced beet sugar recovery in the EU.

The ISA daily price averaged US cents 8.64 per pound in 2001. However, forecasts of a considerable global surplus in 2002/03 have resulted in a downward trend in prices for most of 2002. The ISA daily price averaged US cents 6.69 per pound for the first 10 months of 2002.

Low world prices may induce China to purchase sugar on the international market, to further build stocks, despite increased domestic output. However, the continued expansion in consumption in the Far East and the Russian Federation could firm prices in the short term, as evident in October and November, when the ISA daily price approached an average of US cents 8.00 per lb.

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