Global sugar production surplus is expected to continue, putting downward pressure on prices

Favorable growing conditions in South and Southeast Asia raised global sugar production forecasts for the 2017/18 marketing year, increasing the estimated production surplus for the global sugar market to its highest level in several decades. Production surplus can be defined as global sugar production minus the amount of sugar consumed each year. A positive production surplus results in rising stocks of sugar held in storage around the world, which puts downward pressure on global sugar prices. Production in 2018/19 is projected to decrease from the previous year but still be sizable by historical standards due to higher production forecasts for India and Thailand, in particular. As a result, supplies are projected to outpace use and increase global stocks-to-use ratios, limiting opportunities for price increases in world sugar futures markets, which have been falling since October 2016. The average world futures contract price in the April-to-June quarter was 11.91 cents per pound, which was 21.5 percent lower than the previous year. This chart appears in the ERS Sugar and Sweeteners Outlook newsletter released in June 2018.