Cepea, January 15, 2020 – After the consecutive sugar surpluses observed in the last two seasons, the world 2019/20 crop may have a deficit. The production decreases expected for India and Thailand should lower the world sugar output. Thus, the International Sugar Organization (ISO) estimates a global sugar deficit at 6.11 million tons.
In central-southern Brazil, sugarcane production is estimated to increase slightly in the 2020/21 season, which is partially linked to the higher renovation rate of sugarcane crops, among other factors. However, an increase in the Brazilian sugarcane production would not ensure higher sugar supply, since the production mix should continue favorable to ethanol.
Indeed, the production mix is not expected to change much in 2020/21, compared to that in 2019/20, with slight increases in sugar production. According to estimates from S&P Global Platts, the share of sugar in the production mix should increase from 34% up to 35.5%.
Brazilian sugar exports, which may be boosted by the strong US dollar, may encourage an increase in share of sugar in the production mix. However, in the international market, quotes would have to rise sharply in order to reverse the favorable parity to ethanol – and change the current production mix. Besides, gasoline prices are expected to continue at high levels, which should keep favoring ethanol competitiveness and, consequently, its production.
INTERNATIONAL – According to the USDA, sugar production should decrease five million tons in India in the 2019/20 season, to 29.3 million tons. If that is confirmed, Brazil should continue as the number one sugar-producing country in the world for one more cycle.
In China, with the area increases for sugarcane and sugar beet crops, production should grow from 10.76 million tons to 10.89 million tons. Consumption, in turn, should be similar to that in the previous season.
In the European Union, sugar production should total 17.9 million tons in the 2019/20 season, stable compared to that in the previous crop. Consumption should be higher than production, at 18.6 million tons, according to data from the USDA released in November/19.
NORTHEASTERN BRAZIL – Sugarcane production in northeastern Brazil in the 2019/20 crop (which officially started in September/19) should total 50 million tons, 12.6% higher than the previous, according to data from Conab (National Company for Food Supply) released this month. The consulting company Datagro has estimated sugarcane crushing in northern and northeastern Brazil to total 52 million tons, and sugar production, 2.3 million tons.