Balancing the Surplus: A Second Look at the 2014/15 Cycle

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2014 has been another year of learning to live with the sugar surplus. 

The sugar market has struggled and prices have spent most of the year in a downtrend. Despite this weakness in price we have seen very little production response. We continue to see the 2014/15 season being in balance, and are forecasting a 0.6m mtrv (metric tonnes raw value) surplus. This is lower than the 4.4m mtrv surplus we estimate for 2013/14.


  • We forecast global sugar production will be 184.0m mtrv in 2014/15, compared to 184.1m mtrv in 2013/14 and 185.7m mtrv in 2012/13.
  • This year’s production will therefore be less than 1% below record highs.
  • Beet sugar production will be the second highest in recent history at 38.1m mtrv (35.3m mtrv in 2013/14), largely driven by the EU crop.
  • Cane sugar production is forecast at 145.9m mtrv (148.9m mtrv in 2013/14).

“We are not seeing any response to low prices in global sugar output. In fact, some regions such as the EU look set to have record crops in 2014/15. For others such as Brazil, contraction has been driven largely by weather and poor cane development.”

Stephen Geldart, Analysis Manager


  • We estimate 2014 consumption at 178.8m mtrv (1.9% annual growth) and 2015 consumption at 182.5m mtrv (2.1% annual growth)
  • This is below the 3% per annum seen before the bull market which began in 2009.
  • We are therefore looking for further sources of consumption growth as prices decline.

CS Brazil

  • The 2014/15 season was marked by a lack of rain during the off-crop.
  • Despite this, agricultural yields have performed better than expected.
  • The drought has also led to high levels of sucrose in the cane, which has partially offset the increase in the production mix towards ethanol that we have seen this year.
  • We are therefore expecting sugar production to reach 31.9m tonnes in 2014/15.
  • With the crop now virtually complete attention is already focussed on the 2015/16 crush.
  • Investment in fields has reduced, which has led to a reduction in all types of cane planting.
  • We believe there is limited upside for agricultural yields for next season, even if weather is normal during the off-crop.
  • The BRL is likely to be the key determinant of the sugar mix.
  • The current weak forward curve of the BRL indicates that mills are likely to benefit most from bulk sugar exports.


  • Despite widespread pessimism we expect the 2014/15 cane crush to be the second largest on record at 101m tonnes.
  • Cane acreage has increased following the end of the government’s rice support programme.
  • Provisional cane prices paid to farmers are unchanged from last season at THB 900/mt.
  • We forecast sugar production at 11.1m mtrv, down from 12.0m mtrv in 2013/14.

“2% annual growth adds roughly 3.5m mtrv to consumption each year. This helps to reduce the scale of the surplus each season even though production levels have been largely static. However, given the 21m mtrv rebuilding of global sugar stocks in the last three seasons the market remains well-supplied. This is likely to be reflected in prices in the first few months of 2015.”

Ana Carolina Ferraz, Analysis Manager


  • We forecast Indian production in 2014/15 at 29.0m mtrv, up from 26.9m mtrv in 2013/14.
  • This strong estimate is largely driven by increased production in Maharashtra and Karnataka.
  • Following the end of a 2-season long drought, we believe MH cane acreage has increased by 9% this year.
  • We forecast MH production at 9.3m tonnes, up from 7.7m tonnes last season.
  • We forecast KN will have a record season, producing 4.7m tonnes sugar (up from 4.2m tonnes last season)
  • In Uttar Pradesh we are expecting a 6% decrease in cane acreage following late payments to farmers, but stronger ag yields.
  • Production in UP is expected to reach 6.8m tonnes (6.5m tonnes in 2013/14)


  • We expect Chinese production to fall sharply in 2014/15, to 12.6m mtrv from 14.5m mtrv in 2013/14.
  • This follows three successive decreases in the cane price paid to farmers and the effects of two typhoons, which adversely affected cane development.
  • However, we believe that Chinese consumption growth will be robust in 2015 at 3.5% given the pressure on local prices.


  • EU sugar production is expected to reach 19.0m mtrv in 2014/15, 11% above last season and one of the largest EU crops in recent history.
  • This follows an expansion in beet acreage ahead of the removal of production quotas from October 2017.
  • Prices remain under pressure and we believe that beet acreage could contract in 2015/16.


  • This suggests that the falling world market price to date has not been severe enough to change farmer planting decisions.
  • Part of the problem is that many growers have been sheltered from the price signal by government policy.
  • Consequently in many regions it is the cane millers who are being squeezed the hardest.
  • This is most clear in the case of Brazil where the industry is suffering from a loss of consumer confidence in the hydrous ethanol market, fixed gasoline prices and increased difficulty in servicing USD-denominated debt.
  • We expect around 9 more mill closures in the off-crop, meaning that 20% of the industry will not operate in the 2015/16 season.
  • There has been almost no expansion in cane in Brazil and this looks set to remain the case.
  • It’s consumption which is helping to drive the balance sheet to a more neutral outlook.

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