USDA points to surplus of 8 million tons in the global sugar market


    Porto Alegre, November 30, 2020 – The second biannual world supply and demand report published by USDA brought important news to the market in fundamental terms. The surplus remains, which will keep the future price curve in New York downward; Brazil accounts for three-quarters of the expected growth in international supply; climate risk in the Center-South may provoke new adjustments to the first report of May 2021, and Thailand continues as a strong point of disagreement in the international scenario.

     Basically, one of the main points to be observed in this new picture of the international supply and demand picture is the reduction in the international surplus from 10 to 8 million tons between the May and November reports. Moreover, USDA itself highlights that production in the international year of 2020/21 (October 2020 to September 2021) has an expected increase of 16 million tons over the previous year. As a result, supply must hit 182 million tons. Brazil has a special role by accounting for three-quarters of this expected growth.

    Likewise, demand must sustain the tone of growth by 3.5 million tons, reaching 173 million tons. In absolute terms, supply is growing by 16 million tons, and demand by 3.5 million, which is still relatively positive given the effects of the pandemic and its impact on the internal demand of each country together with some frustrations of supply growth, as is the case of Thailand, which between May and November had its production expectation reduced from 12.9 to 7.85 million tons. If Thailand’s supply had remained stable, production could have reached 5 million above what it is, i.e. the surplus that is currently at 8 million tons could hit 13 million tons, more in line with what SAFRAS & market expected from this report, with estimates pointing so far to 15 million tons.