Sweet signs for cane growers as sugar prices point higher
Australia’s cane sugar market is starting to turn for the better, according to Rabobank’s sugar analyst Charles Clack.
Clack told growers at the bank’s Sugar Update event last week, that there is “light at the end of the woods”, as global stocks are poised to come back into balance in 2019/20, in line with the five-year average.
“This doesn’t mean we will see a strong jump in sugar prices,” he said, “but with the global sugar market set to run up a deficit next season – as consumption exceeds production – there is certainly some upside to the price outlook. And we are forecasting domestic prices to reach around $450 per tonne by the end of this year.”
Rabobank’s Sugar Quarterly is projecting a 4.2 million tonne deficit in 2019/20.
“This signifies a huge rundown in stocks, from the nine million tonne surplus in 2017/18,” he said. “While global stocks will continue to weigh heavily on the market for a few more months yet, the market will start to come back into balance as we approach the end of the year.”
In terms of global sugar consumption, growth is now stagnant in large parts of the developed world – but growth prospects were still positive in emerging economies, with South Korea and Indonesia remaining key destinations for Australian sugar. Clack also highlighted the impact of sweeteners on the industry.
“While we should be concerned by the surge in the use of sweeteners, and the impact this could have on sugar consumption, there are still strong growth prospects in developing economies in terms of their population size and per capita consumption,” he said. “And with Australia located close to these markets, there are certainly some market opportunities there.