Brazil’s sugar production for the Marketing Year (MY) 2017/18 is forecast to rise 1.1 million tons to a record 40.2 million based on favorable weather, improved crop management, and lower use of cane for ethanol. Exports are projected up 1.1 million tons to a record 29.6 million on greater exportable supplies and despite China’s safeguard measure to limit sugar imports from Brazil. Consumption is up slightly while stocks are flat, according to “Sugar Market and Trade, November 2017) released by USDA’s Foreign Agriculture Service.
Global production is forecast to rise 13 million tons (raw value) to a record 185 million, up from USDA’s initial forecast in May. If reached, production would be 20 million tons higher than the 5-year low just 2 years earlier.
Record production in Brazil, expected recoveries in output in India and Thailand due to favorable weather, the end of production quotas in the European Union (EU), and area expansion in China are all contributing factors. The jump in production supports record exports and consumption at 62 million and 174 million tons, respectively. Ending stocks are forecast up 5 percent as higher stocks in the EU and India more than offset lower stocks in China.
Since 2011/12, China has been the world’s leading sugar importer, followed by Indonesia and the United States. Indonesia is expected to surpass China in both 2017/18 and 2016/17 with growing imports from Brazil. Although Indonesia is forecast to become the world’s largest importer, it is not because of new demand but because China is yielding the spot following its policy changes.
Higher domestic production and tighter government control over imports have resulted in China dropping from the largest to the second-largest sugar importer with this revised forecast. Imports are estimated to have declined 1.5 million tons to 4.6 million in 2016/17 and are forecast to drop even further in 2017/18. Conversely, China’s sugar production is forecast to expand again in 2017/18 as high prices and favorable returns are encouraging higher plantings of both sugarbeets and sugarcane.
On May 22, 2017, China’s Ministry of Commerce (MOFCOM) announced a safeguard measure on sugar imports from major supplying countries (such as Brazil, Thailand, Australia, and South Korea). For out-of-quota imports, the tariff was raised sharply from 50 percent to 95 percent, effective May 22, 2017. Sugar imports from many developing countries and regions are exempted from this measure as long as the market share of any of these suppliers remains below 3 percent. The within-quota tariff remains unchanged at 15 percent and applies to 1.945 million tons annually. According to industry reports, 70 percent of sugar import quotas are allocated to state-owned companies. (Source: Sugar Market and Trade, November 2017 – USDA’s Foreign Agriculture Service.)