by Agrimoney.com
Commerzbank cut its forecast for sugar prices, citing the prospects of easier sugar supplies, heightened by an estimate that Russian output of the sweetener may rebound 40% to a record high this year.
The bank cut its forecast for sugar prices in the April-to-June quarter by 2 cents to 25 cents a pound, an estimate which, while in line with current values, suggests further weakness to come.
"This is a quarter average and we had higher prices earlier on," with New York's near-term May lot starting the month above 27 cents a pound, Commerzbank analyst Carsten Fritsch told Agrimoney.com.
"There is a risk that prices will decline further," echoing last year, when a price correction continued from February into May.
However, the bank urged some caution too, noting that in 2010, when prices dipped to 13 cents a pound, "a substantial market surplus was also expected", only to evaporate amid a series of weather setbacks.
'Significant easing'
The price downgrade reflected "increasing reports of a significant easing" in world sugar supplies, with India considering permission for further exports, after the release of 500,000 tonnes last month, once final production figures are known.
Meanwhile, Thailand, the second-ranked exporter, is placed for a 40% rise to 6.7m tonnes in shipments, after an increase to 9.5m tonnes in output, according to official data.
And Lanworth, the US consultancy, on Tuesday lifted by 11m tones to 585m tonnes its forecast for this year's cane harvest in Brazil, the top sugar producer and importer, citing increased soil moisture.
Brazil's sugar output looks on course to hit 37.8m-42.4m tonnes in the newly-begun harvest, up from 37.6m-38.6m tonnes last year, Lanworth said.
Russian recovery
Furthermore, a report late on Tuesday from US Department of Agriculture attaches in Moscow forecast a 40% jump to 30m tonnes in Russia's sugar output, based on a forecast of plantings reaching an all-time high of 1.2, hectares, and a better year for yields after last year's worst drought on record.
"Russian sugar beet production is expected to rebound strongly in 2011 and effectively displace a significant portion of raw sugar imports," the attaches said in a report.
Russia's imports, which have been encouraged by a temporary cut to $50 a tonne from $140 a tonne in duties until the end of this month, will fall by one-third to 2.0m tonnes, the lowest since at least Soviet times.
The report also highlighted industry expectations that investment in Russia's sugar plants will grow from 14bn roubles ($460m) last year to 15.8bn roubles ($526m) in 2012, helped by government subsidies.
"Almost half of the sugar processing plants in Russia were built before 1917, and none have been built in the last 25 years," the briefing said.
"Sixty percent of processing equipment is worn out."
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