World Sugar Production Forecast 2015 - 2016

Sugar prices will down - World sugar production is forecast to fall in the 2015-16,  crushing season but demand is expected to grow due to the expanding Asian food-processing industry. However, growing demand is unlikely to support prices because the weaker global economy is still weighing on prices, according to industry research by Tris Rating.

Global sugar production in 2015-16 is forecast to fall to 174 million tonnes because of reductions in plantation areas in China and India. In contrast, demand for sugar is expected to rise due to growing food-processing sectors in China and India that require more sugar ingredients.

White sugar futures dropped for the fourth straight session to a 6-1/2-year low on Thursday august 20 2015, October white sugar settled down $5.60, or 1.7 percent, at $333.60 a tonne, after touching a 6-1/2-year low of $329.00.

"In July, the International Monetary Fund revised down its projection of global economic growth in 2015 to 3.3% from 3.5%. A slowdown is projected for China and some emerging markets," Tris Rating said.

"There remain large inventories of sugar worldwide, pushing prices down for over three years."

Thai sugar production is expected to rise higher in the current season due largely to an increase in cultivation areas after the government encouraged farmers to switch from rice to sugar cane.

The Office of the Cane and Sugar Board expects the cultivation area in 2015-16 to reach a record 11 million rai, up 4.8% from last year.

It forecasts production of sugar cane to rise 4.4% by from 106.4 million tonnes last year due to rising cultivation areas. However, sugar production is expected to drop due to unfavourable weather that will cut yields.

In the 2014-15 crop, Thailand produced 11.3 million tonnes of sugar, a 0.3% drop from the previous season. Industry experts and traders expect sugar production to remain on a downward trend in the current crop because recent dry weather will cut sugar content in the cane.

Domestic sugar consumption is also expected to drop due largely to the weak economic outlook that will cut demand for food and beverage as well as exports, according to Tris Rating.

In 2014, domestic sugar consumption reached 2.47 million tonnes, up 0.3% from the previous year. In the first quarter of 2015, domestic demand declined by 4.1% year-on-year to 0.6 million tonnes.

"Domestic sugar consumption in Thailand could be affected by the state of the economy. Real GDP grew by 0.9% in 2014 and 3% year-on-year in the first quarter of 2015, as reported by the Office of the National Economic and Social Development Board," Tris Rating said.

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