India continues to bring volatility to global sugar market: Fitch
Jul 29, 2021
Singapore, July 29 : Fitch Solutions on Thursday revised up again its 2021 price forecast for sugar as prices have remained more supported than it was expecting amid bad weather in Brazil.
It now forecasts prices to average USc16.5/lb in 2021 compared with USc14.7/lb previously. This suggests sugar prices will average at their highest level since 2016 in 2021.
The new forecast implies that prices will trend lower in the coming months as Fitch still expects the market to be in surplus in 2021/22.
However, uncertainties regarding supply this year are rising (in Brazil and India) which is posing upside risks to these new forecasts.
Fitch also revised up its 2022 price forecast to average USc14.7/lb in 2022 compared with USc14.0/lb previously. As such, it maintains a view for sugar prices to average lower next year.
In terms of risks, Fitch said India will continue to bring volatility to the sugar market especially due to its export subsidies and rising support to biofuel capacity.
In 2020/21, sugar output in India grew by a robust 16.2 per cent year-on-year to 33.7 million tonnes. Fitch forecast production to rise by 1.5 per cent to 34.2 million tonnes.
Support to farmers has remained elevated under Prime Minister Narendra Modi which is helping plantings. The 2021 monsoon (spanning over June to September) has been somewhat patchy with rainfall coming in one per cent lower than the long-term average so far in June-July.
This poses moderate downside risks to the crop.
Meanwhile, consumption globally will grow at a slowing pace as the healthification megatrend gains pace, accelerated by Covid-19.
Fitch forecast the sugar market to be in surplus in coming years and see its stocks-to-use ratio rising.
