X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Sugar: Major exporters - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jul 7, 2006

    Sugar: Major exporters

    Global sugar consumption in 2006 is estimated to rise to 148 million tones (MT) due to expected growth in consumption in the developing countries of the Far-East and Latin America. Sugar consumption in developing countries is estimated to reach 100 MT in 2006, in line with rising income and population growth. Among developed countries, where demand had been relatively stable, consumption has been forecasted to remain relatively unchanged in the EU, South Korea, and the US. With the WTO ruling, the subsidised export of 5 MT of white sugar by the European Union is also nearing an end. In the current situation, beyond the month of May 2006, no such subsidised sugar would be sold. The price reduction has been to the tune of 36%. With this situation continuing, the international sugar prices are expected to harden.

    The top seven producing countries account for 60% of total world production. The top three producers, Brazil, India, and the EU account for over 40% of total world production. Two of the top four producers, India and China are not among the top exporting countries. In this article we give an insight into the dynamics of the large sugar exporters.

    Brazil: Brazil is by far the world's largest producer and exporter of sugar. The country accounts for 20% of the world production and nearly 38% of total world exports in 2005. More than half of Brazil's sugarcane production is devoted to the production of alcohol. The increase in the domestic demand for fuel alcohol is due to the increase in flex–fuel autos. Total sales of these vehicles, which can run on any mixture of hydrous, anhydrous alcohol or gasoline rose to 3.8 m units in 2004. In 2005, production of sugar and ethanol in Brazil totaled 28.7 m metric tons and 4.8 bn gallons respectively, continuing the record trend witnessed over the past couple of years. The record production has resulted in sugar exports of 18.2 m metric tons and 0.6 bn gallons of ethanol in 2005. In Brazil, a large number of plants are dual plants and can switch easily between the production of sugar and ethanol based on relative prices. Thus, sugar and ethanol prices tend to move closely together. If both ethanol and sugar prices remain competitive in the near future, Brazil is expected to continue to increase sugarcane production for both ethanol and sugar. The country has enough land to easily double sugarcane area harvested. Sugar production is expected to increase by 21.5 % between 2005 and 2015 (Source: Centre for agriculture and rural development).

    European Union: The EU is in the unusual position of being both a leading exporter and importer of sugar. The Customs Union manages this feat by extending its production and export subsidies to developing countries that were former British, French and Portuguese colonies. Under this program the EU imports raw sugar, which it refines and re-exports. The EU is the world's only major producer, exporter, and importer. Due to favorable weather conditions, which produced higher sugar beet production than expected and an above average sugar content in the beets, the EU's total production for 2005 was 21.8 MT.

    Sugar production within the EU was limited by quota. Since sugar that could be sold in the EU was limited by quota, the excess production was exported, effectively cross-subsidized by high domestic prices. While the EU had high import tariff barriers, it allowed preferential imports of raw sugar from African, Caribbean and Pacific countries, which was generally processed into white sugar and re-exported.

    New EU regime: The change in the EU regime includes cuts in EU subsidies. These include cumulative cuts in intervention pricing by 36%. This is likely to cause a cut in sugar production within the EU and also cause a reduction in EU exports.

    Others: With the exception of China, the second tier of producers such as Thailand and Australia are significant exporters. China is a significant importer. Australia exports more than 4 MT, the largest percentage of domestic production of all major world exporters and producers. The third group of significant producers and exporters consists of South Africa, Guatemala, Columbia, and Cuba. Together these countries produce between 8 and 9 MT of sugar and export between 4 and 6 MT.

    Conclusion: Though India is not only one of the world's leading producer it does not export, because to be self-sufficient, India must produce about 20 MT of sugar each year. However, total production is forecast at 18.4 MT, which led to the inventories filling the gap for the third year in a row. Being deficient, the government is still not very keen on exports. However with increased production in coming years, this is likely to be allowed.

     

     

    Equitymaster requests your view! Post a comment on "Sugar: Major exporters". Click here!

      
     

    More Views on News

    Sorry! There are no related views on news for this company/sector.

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    COMPARE COMPANY

    MARKET STATS