NEW YORK, July 3, 2015 /PRNewswire/ -- The global sugar
market has been trending downwards on the back of the persistent
abundance of stocks, aggravated by a strong seasonal mismatch
between export availability and import demand. There is no
indication at the moment of how low sugar prices can go in the
absence of any supportive developments, according to the latest
Rabobank Sugar Quarterly report.
Highlights from the Rabobank Sugar Quarterly:
- Better than expected sugar production from India and Thailand appears to have consolidated the
global surplus projected for 2014/15, bringing stocks to record
levels.
- The sugar pipeline is full for the major importers after a
prolonged period of low prices, suggesting that further price falls
will do little for immediate sugar demand.
- The preliminary global supply/demand balance for 2015/16 looks
headed for a deficit after five consecutive years of surplus, but
the impact on prices may be limited.
"This year's final production from India and Thailand caught most of the industry by
surprise, further highlighting just how precarious surplus/deficit
predictions can be," says Rabobank analyst Yong Chang Jian.
At current prices, it will not be easy for producers to accept
that levels could fall even lower. However, should the 2015/16 crop
do better than initially forecast, we could very well see prices
trending even lower.
"The market might be paying for the cost of carry, but at some
point in time, producers and exporters can no longer kick the can
down the road and will eventually be forced to sell any accumulated
stocks," says sugar analyst Yong Chang
Jian.
El Niño already factored in
Weather-forecasting agencies around the globe have once again
predicted a possibility of an El Niño event this year. US, Japanese
and Australian weather bureaus have placed a 50% to 70% probability
of the weather event happening. This is not news to the market,
having heard about it for over a year now, and there is much debate
as to what extent the weather risk has not been priced into the
market, says the Rabobank Sugar Quarterly report.
About Rabobank
Rabobank Group is a global financial services leader
providing wholesale and retail banking, leasing, and real estate
services in more than 40 countries worldwide. Founded over a
century ago, Rabobank today is one of the largest banks in the
world, with nearly $1 trillion in
assets, and ranks among the 10 safest banks globally. In the
Americas, Rabobank is a premier bank to the food, agribusiness and
beverage industry, providing sector expertise, strategic counsel
and tailored financial solutions to clients across the entire food
value chain.
Full report available on request.
For more information please contact the report's author:
Yong Chang Jian
Tel: +65 62306742
ChangJian.Yong@Rabobank.com
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Tel: 212-808-2576
Catharine.Rossano@rabobank.com
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SOURCE Rabobank