International Agricultural Trade Report
Brazil Leads Surge in World Sugar Production
World centrifugal sugar production in 1999/00 is forecast at a record 131.3 million metric tons, an increase of 2 percent above the previous years output. World exports are forecast to increase slightly to about 34.8 millions tons. Brazil is the worlds largest sugar producer and exporter for the second straight year, surpassing both India and the European Union. Due to the world oversupply situation, Brazil and other exporters will be faced with either exporting sugar at low world prices or maintaining large stocks.
World Production and Trade Situation
The forecast increase in world sugar production marks the sixth consecutive year of increased production. The largest increase in sugar outturn is expected to occur in India, up 6 percent or 1.0 million tons. Brazilian sugar production in 1999/00 is forecast at a record 19.0 million tons, 4 percent above the 1998/99 output. Brazilian production has grown by more than 90 percent since 1993/94, increasing its share of world production from 9 percent to over 14 percent. In the European Union, the largest producer of sugar from sugarbeets, the 1999/2000 output is forecast at 18.4 million tons, up 3 percent from the previous season.
In 1999/00, world sugar trade is forecast at 34.8 million tons, only slightly above the previous years shipments. The European Union, Brazil and Australia are expected to account for the increase. South Africa, Cuba, Guatemala and Thailand are all expected to reduce exports in 1999/00. Brazil is considered the bellweather in the market because it can set the tone for how exporters will cope with the oversupply situation in 1999/00. Brazils ability to export will depend on its willingness to hold stocks or control production versus the profitability of exporting at low price levels.
Leading importers of sugar in 1998/99 are Russia, the United States, Japan, South Korea and the European Union. Russia is expected to remain the worlds largest sugar importer. Despite the relatively low price of sugar, many of the main importers of sugar are facing financial or political problems, which are limiting their imports of sugar and increasing uncertainty in the markets.
Brazilian Production and Exports
Brazilian sugar production continues to grow in large part due to high alcohol stocks and an increase in the price of sugar relative to alcohol. Total Brazilian sugarcane production in 1998/99 totaled 308 million tons, of which the Center-South region accounted for 269 million tons. The unexpectedly large production was the result of dry weather during November and December which allowed millers to extend the sugarcane harvest and crush, and higher-than-expected cane yields. Additionally, very high alcohol stocks reduced alcohol prices relative to sugar, thus making the sugar price more attractive. The Brazilian alcohol sector has been under increased pressure recently, as high carry over stocks and financial problems associated with Brazils overall macroeconomic difficulties have plagued the industry. However, it is important to note that Brazil still utilizes more than half of the total cane crop for alcohol production.
Exports in 1999/00 are forecast to increase to a record 8.8 million tons, a 4 percent increase from the previous year. The January 18 devaluation of the Brazilian currency helped to offset some of the losses associated with the decline in world sugar prices during the 1998/99 season. Brazil has grown from the third largest sugar exporter in 1993/94, accounting for 10 percent of world exports, to the largest exporter in 1999/00, accounting for 25 percent of world exports. Each year, Brazil exports more than 100,000 tons of sugar to at least 10 countries, with Russia, the United Arab Emirates, and Indonesia as the largest markets. Brazilian exporters expect increased shipments in 1999/00 as trade is stimulated by significant domestic surpluses and the need by individual enterprises to generate cash flow. Some sources indicate that Brazilian exports could be even greater, depending on the level of international competition and world sugar market prices.
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