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INTERNATIONAL SUGAR MARKET OUTLOOK

Mr. Somnath Chatterjee , Head-Procurement & Logistics, ITC Foods Division. INTERNATIONAL SUGAR MARKET OUTLOOK. Table of Content. Global Economy Brazil Thailand China India Sugar Cycle. Global growth is projected to strengthen to 3.7 % in 2014 against 3 % in 2013

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INTERNATIONAL SUGAR MARKET OUTLOOK

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  1. Mr. SomnathChatterjee, Head-Procurement & Logistics, ITC Foods Division INTERNATIONAL SUGAR MARKET OUTLOOK

  2. Table of Content Global Economy Brazil Thailand China India Sugar Cycle

  3. Global growth is projected to strengthen to 3.7 % in 2014 against 3% in 2013 • US economy is on a growth path with a growth of 2.8% in 2014, up from 1.9 % in 2013 • The Euro Area is out of recession but per capita incomes are still declining in several countries • Developing country growth rates to rise above 5 % in 2014, China 7.5% , India 5.4% • Overall Global Economic Macros look promising Global Economy

  4. Impact of ‘El Nino’ on Sugar Market Watch out for this angry ‘little boy’, because he’s about to throw quite a tantrum

  5. Ample Supply Low Prices World Outlook After 4 years of surpluses, sugar market is heading towards a deficit next season Adverse weather in Brazil and Asia, higher-than-expected Chinese demand and steady growth in consumption Global sugar demand seen rising at 2.5 % a year Global sugar surplus in 2013-14 is forecasted to be 4.73 MMT, which is 55% lower than in 2012-13 Global consumption continuing its steady increase by around 4.4 MMT/yr and should reach 171 MMT El Nino to have a significant impact on World sugar output Perfect scenario: for how long? Global Production Estimate (2013-14)- 176 MMT Source- USDA

  6. Brazil • Drought conditions and lower rains can negatively impact cane yield across the season • Brazil’s Centre South region struck with drought • El Nino to impact Brazil with warm and dry weather during Dec-Feb impacting production followed by a heavy rain during March affecting the crush • Diversion to Ethanol- Ethanol production consumed 54.6% of the sugar cane reaped this season up from 50.4% a year earlier • Poor Financial health- About 15% of the 320 plants in Brazil's center-south cane belt have been shut down in recent years and many smaller privately owned mills are teetering on the brink of financial collapse Production Estimates 2013-14 (37.8 MMT) 2014-15 (36.8 MMT) Source- USDA

  7. Thailand Thailand expecting dryer weather to likely impact their sugarcane regions New crop projected to decline by 3.4% as yields return to normal Prolonged drought would lower the quality of cane, cutting the sugar content Forecast of lower World’s sugar prices- 5% fall in cane planting observed With consumption at 2.7 MMT, the country shall continue to remain a structural exporter to the world Exports are set to hit a record high of 8.3 MMT Production Estimate 2013-14 (11.39 MMT) 2014-15 (11.00 MMT) Source- USDA

  8. China • Rising consumption coupled with outpaced production and lower imports are expected to bring down the ending stocks • Production forecasted to be down by 4% • Lower domestic sugar prices and yields Production Estimate 2013-14 (14.4 MMT) 2014-15 (13.7 MMT) Source- USDA

  9. India Production Estimate for current sugar season is 24.5 MMT 4 consecutive high production years Low sugar realization Cane payment arrears leading to reduced plantings in Uttar Pradesh by 10-15% Production could be hit in Maharashtra and Karnataka due to prospects of poor monsoon Bullish outlook is foreseen, at least relative to last three years El Nino would further increase bullish outlook

  10. Sugar Production Cycle Pattern- India Three years of high output followed by two very bad production years

  11. Sugar cycle: India- View WE ARE HERE Lower production compounded by El Nino

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