Asia May Face Supply Shortages, Queensland Sugar Says

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23 Aug 2010

Sugar refineries in Asia may have supply shortfalls if Brazilian shipping problems continue, Australia’s largest exporter of the sweetener said. “From November and probably for the January-to-March period next year, which is normally when Brazil would send a reasonable amount of product over here, that’s when it looks like it’s potentially going to be tight,” Queensland Sugar Ltd. Chief Executive Officer Neil Taylor said by phone from Brisbane.
Raw sugar futures in New York rallied to a more than four- month high this week as a record number of ships waited to load supplies at ports in Brazil, the world’s largest exporter. Delayed rainfall has cut forecasts for Thai production and exports, Rangsit Hiangrat, director of the Cane and Sugar Industry Policy Bureau said July 15.
“We haven’t got much more to sell, the Thai’s haven’t got much more to sell so if the customers haven’t got stock they are very reliant on Brazil,” Taylor said. The Australian export crop was about 80 percent committed, he said.
Raw sugar for October delivery rose 1.3 percent, to 18.52 cents a pound on ICE Futures U.S. at 5:45 p.m. Melbourne time after touching 19.88 on Aug. 2, the highest level since March 15.
The direction of prices would depend on whether Brazil cleared its export delays and the effect of India’s monsoon on production and exports, according to Taylor. Queensland Sugar ships more than 90 percent of Australia’s raw sugar exports.
Cane Harvest
Australia’s harvest was about 25 percent to 30 percent completed following some delays in the far north because of rain, Taylor said. Exports for the year started June 1 were likely to be similar to last year’s level of a slightly more than 2.9 million tons, he said.
“Demand in Asia remains very strong,” he said earlier today in a statement. “Refiners will need to import around 3.5 million metric tons in the next six months, which will be hard to get while sugar remains caught up in the shipping delays in Brazil.” Sugar consumption in Asia was continuing to increase at a faster pace than regional production, he said.
Commonwealth Bank of Australia forecast this week that raw sugar prices will decline this year as shipping-delay concerns in Brazil ease and importers complete purchases deferred from the first quarter of the year.
“We predict that prices will come under downward pressure as the market’s supply squeeze dissipates in the fourth quarter,” Luke Mathews, an agricultural commodities analyst at the bank, wrote in a report.
Prices may average 18.3 cents in the September quarter, 16 cents in the December quarter and decline to 11.5 cents in the third quarter of 2011, according to CBA. Rising demand from Asia, particularly China would drive prices in the “longer term,” CBA said.

Source: Bloomberg