Sugar Market Factors affecting Sugar Price
Industry Outlook 14 ตุลาคม 2010 ผรินทร อมาตยกุล คณะทํางานดานตางประเทศ
Sugar Market
World Sugar Price The sugar price increased to a 29-year high at 30.40 Cent/lb in January 2010.
Source : Reuters
2
Sugar Market
World Sugar Price Since September 2009 the sugar price still volatile. The factors that affect the sugar price are under estimated of India production, Hedge Funds, Speculators and etc.
Source : Reuters
3
Sugar Market
World Sugar Balance Sugar Balance estimates will continue to deficit in the next two years. For 2011, there is 4 Million tons surplus. mln mt. 170.00 166.00
Source : F.O.Licht's International Sugar and Sweetener
4
Sugar Market
Asia Sugar Balance Asian Sugar Balance is still continuously deficit. For Y2011 production forecast deficit approximately 17 Million tons. mln mt. 77.00 60.00
Source : F.O.Licht's International Sugar and Sweetener
5
Sugar Market
Brazil Market Since 2000, Brazil Sugarcane annually rise around 10% production. Moreover, Brazil decided to allocate to produce ethanol 45 – 50%, However, Brazil export sugar approximately 50% of the world sugar market.
Source : CZarnikow
6
Sugar Market
Brazil Market In 2010, it is likely that low sucrose yield due to early cane crushing in CS Brazil and heavy rain in late September.
Source : Kingsman
7
Sugar Market
Brazil Market Since 2007, there is Ethanol allocation around 55-60% of total Brazilian cane output.
Source : Czarnikow
8
Sugar Market
India Market Crop estimates in Maharashtra, Uttar Pradesh, and Kushrat are around 25 Million Tons because of the weather condition is suitable for sugarcane growing.
Indian rainfall
Source : Kingsman, USDA
Sub-Surface Soil Moisture
9
Sugar Market
India Market India Sugar output forecast in 2010/11 should be around 25 Million tons. also, there is sugar surplus 3-3.5 Million tons.
Source : F.O. Licht, Kingsman
10
Sugar Market
Australia Market Australian Sugar Production is unchanged because of limited sugar cane areas.
Source : Kingsman
11
Sugar Market
EU Market
EU Sugar Production in 2010/11 may be around 16.0-16.5 Million tons.
Source : Kingsman
12
Sugar Market
China Market Chinese rainfall
Source : USDA
Sub-Surface Soil Moisture
13
Sugar Market
China Market China Sugar Production is estimated around 12.5-13.0 Million tons. The strong price expectation that Sugar consumption in China would more supply as prolonged drought and cold weather caused sugarcane production to fall in Guangxi and Yunnan.
China Sugar Production
Source : F.O. Licht, Reuters
China Sugar Import
14
Sugar Market
Thailand Market Sugarcane production has been in 68.48 Million Tons, due to the weather and the world sugar price.
Source : Office of the cane and sugar board
15
Sugar Market
Thailand Market The Average crushing capacity in the last 2 year has been increasing to 680K – 750K TCD. While the average 3 year before the range was 650K – 680K TCD.
Source : Office of the cane and sugar board
16
Sugar Market
Thailand Market The sugarcane yield in 2009/10 is 100.80 kg./Tons. And sugarcane yield at the end of crushing, it is the lowest in the last 7 year.
Source : Office of the cane and sugar board
17
Sugar Market
Thailand Market At the closing date, 14 Apr’10 , Total sugar production is 6.9 Million Tons, Raw 3.8 Million Tons, White 1.6 Million Tons, Refined 1.4 Million Tons and The other 0.1 Million Tons.
7.8 Mln 6.7 Mln
5.2 Mln
7.2 Mln
6.9 Mln
4.8 Mln
Source : Office of the cane and sugar board
18
Sugar Market
Thailand Market Why Sugar Yield Drop?
As closing date , Yield falls in 2009/10( Y09/10 vs. Y08/09 Diff. – 6.65 kg./Ton) -
To early to crushing, the canes are not mature and high reducing sugar
-
Reducing and Unsuitable period to input fertilizer
-
Drought condition hurts cane production and reduce yield
-
Inappropriate size of sugarcane cutting
-
Unbalancing quantities of sugarcane with crushing capacity
Source : Office of the cane and sugar board
19
Sugar Market
Thailand Market Regional deficit and low Thai sugarcane production led to high record of Thai Premium.
Source : Kingsman
20
Sugar Market
TCSC’s Pricing
Year
NY#11 ; TCSC (c/lb)
Premium (USD/Ton)
Exchange Rate (Baht/USD)
Cane Price (Baht)
2007/08
10.75
121.39
33.27
673
2008/09
14.93
155.20
34.34
918
2009/10
19.19
72.22
32.51
~1,000
2010/11
18.88 (72.20%)
117.19 (79.67%)
~31.00
~1,000
2011/12
???
???
???
???
21
Sugar Market
Thailand Market In Y2009/10 Thailand had the high record in Provisional cane price, the estimate in 2010/11 should be more than 1,000 Baht/ton.
Source : Sugarzone.in.th
22
Sugar Market
Thailand Market Drought condition in Thailand will be the key success to the cane crop in this year. Y2009
Nov’08
Jan’09
Mar
Apr
May
Jun
Aug
Sep
Jan’10
Mar
Apr
May
Jun
Aug
Sep
Y2010
Nov’09
Source : USDA.gov
23
Sugar Market
Thailand Market : What will be? The Thai Farmers have been new plantation in Sugarcane areas at least 300,000 Rai. The estimate sugarcane areas 6.7-7 Million rai. However, the first half of the year had the drought condition. The production is about 65 – 67 Million tons.
Source : Sugarzone.in.th
24
Sugar Market
Thailand Market In Y2010 A-Quota is about 2.2 Million tons, to be increased for Y2009 approximately 0.3 Million tons (+15.80%). Moreover, The Ministry of Industry imported additional sugar about 74,350 Tons
9.00
7.30
8.00 7.00
6.18
7.82 7.01
6.72
7.19
6.50
Minister of Industry
5.19
6.00
6.99
4.84
5.00
C
4.00
B
3.00 2.00 1.00
1.85
1.90
1.92
01/02
02/03
03/04
2.00
2.20
2.00
1.80
1.90
2.20
04/05
05/06
06/07
07/08
08/09
09/10
2.50
A
10/11
25
Sugar Market
Factors affecting Sugar Price Hedge Funds and Speculators are re-investing in commodity.
26
Sugar Market
Factors affecting Sugar Price The USD continues to weak due to giving more stimulus to US economy by FED. It causes rising in sugar price.
NY#11 VS US Dollar Index
Source : FutureSource
CRB VS US Dollar Index
27
Sugar Market
Factors affecting Sugar Price
White Premium should be around $80-120 per ton because refined sugar production capacity is limited and NY#11 price increases which result in Tolling cost rise.
$80 – $120 $40 – $80
Source : Reuters
28
Sugar Market
Weather
Due to climate change and uncertainty of weather patterns worldwide (El Niño ) especially in the sugarcane producing countries, weather becomes the key factor in determining World Sugar Production.
29
Sugar Market
International Trade Policy 2015 Asian-China: Raw/White sugar maintain at 50 % Thai-Indonesia: (MOU) Reduce sugar import duty to maintain at 5% (2015) Thai-Philippines: (MOU) Reduce sugar import duty to maintain at 5% (2015)
2008 - 2010 Thai-Australia: Raw/White sugar are reduced to maintain at 65 % Thai-NZ: Raw/White sugar reduce to maintain at 0 % And Molasses reduce to maintain at 12 % Asian-Australia,and NZ(2009): Completely operate 0% import duty Asian-China: Raw/White sugar reduce to maintain at 65% And reduce Molasses tax rate in 2010 to maintain at 0 %
2006-2007 Asian-Korea: Molasses and Raw Sugar ready to decrease to 0% import duty Thai-India: Raw/White sugar reduce to maintain at 0% And Molasses is reduced to maintain tax rate as a normal Goods. 30
Q & A
31
Sugar Market
World Sugar Price The sugar price increased to a 29-year high at 30.40 Cent/lb in January 2010.
Source : Reuters
2
Sugar Market
World Sugar Price Since September 2009 the sugar price still volatile. The factors that affect the sugar price are under estimated of India production, Hedge Funds, Speculators and etc.
Source : Reuters
3
Sugar Market
World Sugar Balance Sugar Balance estimates will continue to deficit in the next two years. For 2011, there is 4 Million tons surplus. mln mt. 170.00 166.00
Source : F.O.Licht's International Sugar and Sweetener
4
Sugar Market
Asia Sugar Balance Asian Sugar Balance is still continuously deficit. For Y2011 production forecast deficit approximately 17 Million tons. mln mt. 77.00 60.00
Source : F.O.Licht's International Sugar and Sweetener
5
Sugar Market
Brazil Market Since 2000, Brazil Sugarcane annually rise around 10% production. Moreover, Brazil decided to allocate to produce ethanol 45 – 50%, However, Brazil export sugar approximately 50% of the world sugar market.
Source : CZarnikow
6
Sugar Market
Brazil Market In 2010, it is likely that low sucrose yield due to early cane crushing in CS Brazil and heavy rain in late September.
Source : Kingsman
7
Sugar Market
Brazil Market Since 2007, there is Ethanol allocation around 55-60% of total Brazilian cane output.
Source : Czarnikow
8
Sugar Market
India Market Crop estimates in Maharashtra, Uttar Pradesh, and Kushrat are around 25 Million Tons because of the weather condition is suitable for sugarcane growing.
Indian rainfall
Source : Kingsman, USDA
Sub-Surface Soil Moisture
9
Sugar Market
India Market India Sugar output forecast in 2010/11 should be around 25 Million tons. also, there is sugar surplus 3-3.5 Million tons.
Source : F.O. Licht, Kingsman
10
Sugar Market
Australia Market Australian Sugar Production is unchanged because of limited sugar cane areas.
Source : Kingsman
11
Sugar Market
EU Market
EU Sugar Production in 2010/11 may be around 16.0-16.5 Million tons.
Source : Kingsman
12
Sugar Market
China Market Chinese rainfall
Source : USDA
Sub-Surface Soil Moisture
13
Sugar Market
China Market China Sugar Production is estimated around 12.5-13.0 Million tons. The strong price expectation that Sugar consumption in China would more supply as prolonged drought and cold weather caused sugarcane production to fall in Guangxi and Yunnan.
China Sugar Production
Source : F.O. Licht, Reuters
China Sugar Import
14
Sugar Market
Thailand Market Sugarcane production has been in 68.48 Million Tons, due to the weather and the world sugar price.
Source : Office of the cane and sugar board
15
Sugar Market
Thailand Market The Average crushing capacity in the last 2 year has been increasing to 680K – 750K TCD. While the average 3 year before the range was 650K – 680K TCD.
Source : Office of the cane and sugar board
16
Sugar Market
Thailand Market The sugarcane yield in 2009/10 is 100.80 kg./Tons. And sugarcane yield at the end of crushing, it is the lowest in the last 7 year.
Source : Office of the cane and sugar board
17
Sugar Market
Thailand Market At the closing date, 14 Apr’10 , Total sugar production is 6.9 Million Tons, Raw 3.8 Million Tons, White 1.6 Million Tons, Refined 1.4 Million Tons and The other 0.1 Million Tons.
7.8 Mln 6.7 Mln
5.2 Mln
7.2 Mln
6.9 Mln
4.8 Mln
Source : Office of the cane and sugar board
18
Sugar Market
Thailand Market Why Sugar Yield Drop?
As closing date , Yield falls in 2009/10( Y09/10 vs. Y08/09 Diff. – 6.65 kg./Ton) -
To early to crushing, the canes are not mature and high reducing sugar
-
Reducing and Unsuitable period to input fertilizer
-
Drought condition hurts cane production and reduce yield
-
Inappropriate size of sugarcane cutting
-
Unbalancing quantities of sugarcane with crushing capacity
Source : Office of the cane and sugar board
19
Sugar Market
Thailand Market Regional deficit and low Thai sugarcane production led to high record of Thai Premium.
Source : Kingsman
20
Sugar Market
TCSC’s Pricing
Year
NY#11 ; TCSC (c/lb)
Premium (USD/Ton)
Exchange Rate (Baht/USD)
Cane Price (Baht)
2007/08
10.75
121.39
33.27
673
2008/09
14.93
155.20
34.34
918
2009/10
19.19
72.22
32.51
~1,000
2010/11
18.88 (72.20%)
117.19 (79.67%)
~31.00
~1,000
2011/12
???
???
???
???
21
Sugar Market
Thailand Market In Y2009/10 Thailand had the high record in Provisional cane price, the estimate in 2010/11 should be more than 1,000 Baht/ton.
Source : Sugarzone.in.th
22
Sugar Market
Thailand Market Drought condition in Thailand will be the key success to the cane crop in this year. Y2009
Nov’08
Jan’09
Mar
Apr
May
Jun
Aug
Sep
Jan’10
Mar
Apr
May
Jun
Aug
Sep
Y2010
Nov’09
Source : USDA.gov
23
Sugar Market
Thailand Market : What will be? The Thai Farmers have been new plantation in Sugarcane areas at least 300,000 Rai. The estimate sugarcane areas 6.7-7 Million rai. However, the first half of the year had the drought condition. The production is about 65 – 67 Million tons.
Source : Sugarzone.in.th
24
Sugar Market
Thailand Market In Y2010 A-Quota is about 2.2 Million tons, to be increased for Y2009 approximately 0.3 Million tons (+15.80%). Moreover, The Ministry of Industry imported additional sugar about 74,350 Tons
9.00
7.30
8.00 7.00
6.18
7.82 7.01
6.72
7.19
6.50
Minister of Industry
5.19
6.00
6.99
4.84
5.00
C
4.00
B
3.00 2.00 1.00
1.85
1.90
1.92
01/02
02/03
03/04
2.00
2.20
2.00
1.80
1.90
2.20
04/05
05/06
06/07
07/08
08/09
09/10
2.50
A
10/11
25
Sugar Market
Factors affecting Sugar Price Hedge Funds and Speculators are re-investing in commodity.
26
Sugar Market
Factors affecting Sugar Price The USD continues to weak due to giving more stimulus to US economy by FED. It causes rising in sugar price.
NY#11 VS US Dollar Index
Source : FutureSource
CRB VS US Dollar Index
27
Sugar Market
Factors affecting Sugar Price
White Premium should be around $80-120 per ton because refined sugar production capacity is limited and NY#11 price increases which result in Tolling cost rise.
$80 – $120 $40 – $80
Source : Reuters
28
Sugar Market
Weather
Due to climate change and uncertainty of weather patterns worldwide (El Niño ) especially in the sugarcane producing countries, weather becomes the key factor in determining World Sugar Production.
29
Sugar Market
International Trade Policy 2015 Asian-China: Raw/White sugar maintain at 50 % Thai-Indonesia: (MOU) Reduce sugar import duty to maintain at 5% (2015) Thai-Philippines: (MOU) Reduce sugar import duty to maintain at 5% (2015)
2008 - 2010 Thai-Australia: Raw/White sugar are reduced to maintain at 65 % Thai-NZ: Raw/White sugar reduce to maintain at 0 % And Molasses reduce to maintain at 12 % Asian-Australia,and NZ(2009): Completely operate 0% import duty Asian-China: Raw/White sugar reduce to maintain at 65% And reduce Molasses tax rate in 2010 to maintain at 0 %
2006-2007 Asian-Korea: Molasses and Raw Sugar ready to decrease to 0% import duty Thai-India: Raw/White sugar reduce to maintain at 0% And Molasses is reduced to maintain tax rate as a normal Goods. 30
Q & A
31
