Bottleneck in the global sugar market

Due to the prolonged period of recorded production deficits in sugar, damage caused by climate conditions in major production areas, and logistical problems, the world's largest sugar trading company stated that the market is going through a bottleneck similar to the 2010-2011 period.

Mauro Angelo, CEO of Alvean, a trading company controlled by Brazilian producer Copersucar SA, stated, "The current conditions are eerily similar."

The company is preparing for a sixth consecutive deficit in the upcoming season as the poor outlook for India's crops reduces global sugar stocks. While a repeat of the bottleneck experienced in the largest producer, Brazil, over the last decade is anticipated, a global supply deficit is expected.

In an interview with Bloomberg, Alvean CEO Angelo said, "The rainfall in India was unfavorable, water reserves are extremely low, so the next crop could be even worse than the current one."

India is not expected to export sugar in the season that has just begun. Two seasons ago, the country had increased its exports to 11 million tons.

Angelo noted that this means markets are dependent on Brazil, making prices extremely sensitive to issues such as untimely rains that threaten to disrupt harvests or delay ship loadings.

Sugar is already being stored at Brazilian ports. Meanwhile, heavy soybean and corn crops are emerging as a factor threatening sugar's capacity in terms of logistics. At the same time, recent heavy rains create the risk of increasing the time ships have to wait for loading.

News Source: 12punto