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Total world sugar output is now estimated to fall by 9.2 million tonnes to 177.1 mln in the new crop year, according to sister title FO Licht. If realized, this would be the lowest output in the past four years and would be 24.6 mln tonnes less than the record 201.7 mln tonnes produced just two years ago.

The fall in world production in 2019/20 will be due to an assumed strong decrease in production in India and Thailand, Licht outlined. “What's more, sugar production in the EU is now seen slightly lower than last year, while Brazil may produce a little more than a year ago,” it said.

While such a strong drop in output is supportive for sugar prices in an isolated analysis, a significant rise in prices will still be prevented by massive stocks from the past crops in India, Licht explained.

Meanwhile, the fall of the Brazilian currency to an all-time low against the US dollar is also keeping a lid on prices as higher prices could reverse the heavy bias of Brazilian millers for ethanol production, which could then trigger a flood of sugar for the world market.

“That said, a significant rise in world sugar futures prices seems rather unlikely in the current season,” Licht warned.

 

Sugar beet

World beet sugar production is seen rising slightly to 41.5 mln tonnes from 40.8 mln a year ago, according to Licht. Sugar output in the EU is now even seen slightly below the year-ago level and the production outlook in the US has also deteriorated significantly due to bad weather. On the other hand, Russia is projected to produce much more sugar than a year ago with the increase there more than offsetting the reductions elsewhere.

Sugar production in the EU is now projected to reach 17.5 mln tonnes. Dry weather conditions this summer had affected much of France with beets benefiting from rains in late September and early October. Overall Licht’s French sugar production forecast remains at 4.9 mln tonnes, unchanged from last season. Meanwhile in Germany, rainfall, Licht’s sugar production forecast for 2019/20 has been reduced to 4.1 mln tonnes.

In Poland, drought has adversely affected beet yields again this season with the average currently seen reaching only 57 tonnes per hectare. As a result, Licht has cut its sugar production outlook by 266,000 tonnes to 2.2 mln, which would be down from 2.4 mln last year.

In the UK, the sugar beet harvest initially got off to a good start, but subsequent rainfall hindered operations. All in all, Licht still expects nearly 1.2 mln tonnes of sugar to be produced, fractionally higher than last season.

In the Netherlands, parts of the country have been badly hit by drought with area under cultivation falling to 80,700 ha this year from 86,200 ha a year ago due to the drop in prices. Here, Licht’s sugar production forecast has been reduced by 60,000 tonnes to 1.15 mln tonnes.

“A significant rise in world sugar futures prices seems rather unlikely in the current season”Meanwhile, Russian farmers increased the area sown to sugar beet to 1.143 mln ha for the 2019/20 crop, up 1.7% from last year with Licht raising its sugar beet production outlook for the current season to 7.8 mln tonnes. 

Farmers in Ukraine sowed 220,600 ha to sugar beet in 2019, down 20.2% from a year ago with unfavourable weather causing a drop in beet yield to about 44.5 tonnes/ha this season. As a result, Licht has cut its sugar production outlook to 1.5 mln, down sharply from nearly 2.0 mln tonnes a year ago.

“Freezing weather conditions hit large portions of the United States and made a sizeable chunk of the country's beet area unharvesteable,” outlined Licht.Expectations for US beet sugar production in 2019/20 have been scaled back massively to 4.2 mln tonnes due to poor harvest conditions resulting in lower sugar beet production.

If realised, this would be the lowest beet sugar output since 2009/10. Yet, there seems to be room for a further downside revision depending on the eventual abandonment rate of the harvest area.

Sugar cane

With India and Thailand expected to produce significantly less sugar in the new season, world cane sugar production is now seen falling by 9.9 mln tonnes on the year to 135.6 mln, according to Licht.

“Interestingly, this is nearly 20 mln tonnes less than the record 155.2 mln tonnes produced in 2017/18,” it said. Asian sugar output is now seen 9.8 mln tonnes lower than in 2018/19 at 64.8 mln tonnes, mainly due to the reduction in India and Thailand. While sugar cane production in South America may rise by 0.4 mln tonnes to 38.0 mln from last season's 13-year low.

India is expected to see a sharp drop in production this season

India is expected to see a sharp drop in production this season due to bad weather in the key sugar producing states of Maharashtra and Karnataka, in the west of the country. All in all, Licht has reduced its sugar production forecast to 28.3 mln tonnes (26.0 mln white value) in 2019/20, which is 7.6 mln less than last season.

For Thailand's sugar production in 2019/20, Licht assumes a sharp drop to 12.5 mln tonnes as poor cane prices at a time of rising prices for cassava - a key competitor for cane cultivation - have driven farmers to switch between crops.

world sugar cane chart

Meanwhile, Pakistan's sugar production is projected to fall about 0.2 mln tonnes year-over-year to 5.7 mln tonnes in 2019/20. “If realised, this means that production has dropped by 2.0 mln tonnes from the record 7.7 mln tonnes produced in 2016/17,” said Licht. Farmers have switched to other crops in recent years due to tensions over cane prices and payments with the millers, it explained. 

Brazilian sugar production in 2019/20 is now estimated to reach half a million tonnes more than a year ago

In Brazil, sugar production in 2019/20 is now estimated to reach 30.9 mln tonnes, half a million tonnes more than a year ago. Rather dry weather conditions allowed sugar mills in Brazil's Centre/South to continue crushing cane at a strong pace throughout October. The total crush is still estimated at about 585 mln tonnes, 12 mln tonnes more than last year.

In Mexico sugar production is expected to fall sharply this season due to drought, which will more than offset a small rise of the cane area by about 5,000 ha to 809,000 ha. As a result, the cane crush is seen falling to 51.1 mln tonnes from 57.0 mln last, which at a comparable sugar extraction rate as last year would reduce sugar output to about 5.9 mln tonnes; down sharply from 6.6 mln in 2018/19.

US cane sugar production in 2019/20 is forecast to be slightly lower than last year at 3.7 mln tonnes. Chilly weather has not only affected beet growers, but it also weighing on cane growers in the south, said Licht.

Sugar production in Guatemala is projected to rise modestly to 3.2 mln tonnes in 2019/20 as the use of an improved cane variety is seen aiding the extraction rate. Meanwhile, Cuba's sugar output is estimated to remain unchanged at 1.3 mln tonnes in 2019/20.

Australia's 2019 sugarcane crush may reach just above 30 mln tonnes, down from 32.5 mln a year ago, Licht indicated. “It has been a difficult season for growers who were first hampered with wet weather early in the year, and then suffered from little in-crop rain,” it said.

Prices

World sugar futures continued to seesaw within their familiar trading range with the market lacking a clear overall trend. While it is supported to the downside from projections of a sizeable sugar deficit in the new 2019/20 season, quotations are pressured by an ongoing depreciation of the Brazilian real against the US dollar. The BRL posted its lowest ever close of 4.2061 per dollar in November, as heavy selling met no resistance from the Central Bank. This was above the previous all-time closing high of 4.1957, but perhaps more importantly, comfortably above the 4.20 mark. That is roughly where the Central Bank intervened in August this year, selling dollars outright on the spot market for the first time in a decade as the currency approached its record low of around 4.25 per dollar struck in 2015.

The strong depreciation of the real has given Brazilian sugar millers the possibility to price sugar far into the next 2020/21 season, which may lead to a higher sugar mix in 2020/21 compared to the current season.

World sugar beet and cane production chart

Explore More: 2025 Global Sugar Balance

After a balanced market in 2021/22, the balance is expected to shift to surplus again. World sugar production in 2024/25 may reach about 200 million metric ton, while consumption is expected to rise to 200 million tons as well. Fill the form to learn more.
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