Sugar glut extending to longest in more than decade

Soybean Yields

China, the second-biggest consumer after India, will probably limit annual imports to no more than 1 million tons through 2015, Liu Hande, vice chairman of the China Sugar Association, said in a speech in Singapore on Sept. 27. The nation bought 3.3 million tons in the past season, the ISO estimates. Domestic production will reach 14 million tons, from 11.5 million tons, boosting stockpiles to a record, Liu said.

Just as heat and drought curbed corn, wheat and soybean yields this year, so sugar output may be diminished by extreme weather. Production in India, the second-biggest grower, will probably drop almost 10 percent to 23.5 million tons this season because of lower-than-average rainfall, according to ED&F Man Commodities India Pvt., a unit of the commodities trader founded more than two centuries ago.

Sugar prices at the factory gate in India may rise 19 percent to 40 rupees a kilogram (34 cents a pound) by January, according to Narendra Murkumbi, the managing director of Shree Renuka Sugars Ltd., the country’s top refiner. While most of the cane-growing regions are irrigated, there wasn’t enough water left in the reservoirs supplying them to compensate for a below- average monsoon, according to Rabobank International.

Farmers Reap

Dry weather will probably curb production in Thailand, the second-biggest shipper, said Piromsak Sasunee, chief executive officer of Thai Sugar Trading Corp., the nation’s largest exporter. Farmers will reap as little as 92 million tons of cane this season, yielding about 9.8 million tons of sugar, he said. That compares with 98 million tons and 10.2 million tons in the past season, government data show.

More producers in Brazil may switch to ethanol as sugar prices decline, according to Abah Ofon, an agricultural analyst at Standard Chartered Plc in Singapore. The country is set to be the biggest exporter of the fuel this season and futures rose 5.4 percent to $2.369 a gallon on the Chicago Board of Trade this year.

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