India continues to bring volatility to the global sugar market: Fitch


Fitch Solutions revised upward its sugar price forecast for 2021 on Thursday, as prices remained more sustained than expected due to bad weather in Brazil.

He now expects prices to average 16.5 USc / lb in 2021, up from 14.7 USc / lb previously. This suggests that sugar prices will on average be at their highest level since 2016 in 2021.

The new forecast implies that prices will tend to fall in the coming months, as Fitch still expects the market to be in surplus in 2021/22.

However, supply uncertainties are increasing this year (in Brazil and India) which puts upside risks to these new forecasts.

Fitch also revised its price forecast for 2022 upwards to an average of 14.7 USc / lb in 2022 from 14.0 USc / lb previously. As such, he maintains a view of average sugar prices lower next year.

In terms of risks, Fitch said India will continue to bring volatility to the sugar market, especially given its export subsidies and growing support for biofuel capacity.

In 2020/21, sugar production in India increased 16.2% year-on-year to 33.7 million tonnes. Fitch expects production to rise 1.5 percent to 34.2 million tonnes.

Support for farmers has remained high under Prime Minister Narendra Modi who helps plantations. The monsoon of 2021 (June to September) has been somewhat patchy with rainfall 1% below the long-term average so far in June-July.

This poses moderate downside risks to the crop.

Meanwhile, global consumption will increase at a slower rate as the health megatrend accelerates, accelerated by Covid-19.

Fitch predicts that the sugar market will be in surplus for years to come and see its inventory-to-use ratio increase.

This story was posted from an agency feed with no text editing. Only the title has been changed.

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