Sugar price and surplus forecasts indicate price falls

A consensus of forecasts from leading market sources for sugar prices at the end of 2011 indicate a mean forecast for raw sugar of 25.19 cents per pound with the highest being 31 cents and the low forecast being 21.50 cents.  The forecasts for white sugar at the end of 2011 indicate a mean of $670 per tonne with a high forecast of $800 and a low of $562. The forecast for the global sugar surplus for the 2011/12 season is a mean of 6.35 million tonnes with a high forecast of 9 million tonnes and a low of 3.5 million tonnes.

The forecasts indicate that sugar prices may be trending lower over the next few months.  The forecasts were obtained in mid July 2011. A weaker U.S. dollar and UNICA announcing in July that Brazil’s center south sugar cane crop is likely to be down by over 6% or 35.5m tonnes due to bad weather and older ratoons resulted in sugar prices soaring with white sugar reaching a record $890 per tonne and raw sugar hitting a 4 month high of 31.33 cents per pound. 

Sugar production is expected to decrease by slightly more than 2 million tonnes with slightly less sugar than expected being diverted to ethanol production due to higher margins from current sugar prices.

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