Brazil Crop Expected to Push Sugar Prices Even Lower

Global sugar prices, which slumped to a 10-year low in April, are likely to fall further this year as Brazil begins to ship its 1998-99 crop, according to a report by London-based sugar traders ED&F; Man Sugar Ltd.

In mid-June, Brazil, the world’s largest sugar producer, is expected to start shipping sugar from the southern part of the country, the largest growing region. Analysts say Brazil’s next harvest will probably exceed last year’s record 15.25 million tons.

Sugar prices have already plunged this year after record harvests in Brazil and the European Union and after slumping economies in East Asia reduced demand for sugar imports in the region.

“The downward spiral of prices may resume later in the year when the Brazilian export availability gathers speed,” ED&F; Man said in its latest Sugar Situation Report.

Last year’s record European Union sugar crop continues to weigh on the price of refined sugar in London, the report said. White sugar slumped to a 10-year low of $244 a metric ton last month on the London International Financial Futures and Options Exchange.

While white sugar supplies have increased, demand for the refined commodity remains sluggish.

Middle Eastern sugar companies are now buying cheaper raw sugar to process themselves, and Iran, which bought 600,000 tons of EU white sugar in 1996-97, is expected to buy only 400,000 tons of refined sugar this year, Man said.

India, the world’s largest sugar consumer, may need to buy more foreign sugar next year if the 1998-99 harvest falls below the expected 14 million metric tons, the report said.