Sugar markets of India, the largest consumer and China the second in consumption are becoming a new region of interest for the Latin American exporters, Brazil and Guatemala. Freight charges to various Asian destinations from the region tumbled from $80 per ton to about $20, have chiefly contributed to the renewed interest in Asian markets.
Though there are mixed reports from various Asian countries regarding the import policies, both Brazil and Guatemala seemed to be at an advantage. China, South Korea and India, the second largest producer of sugar have shown keen interest in Brazilian as well as Guatemalan sugar due to superior quality and lower prices. On the contrary, Indonesia has cut imports of sugar in order to reduce the huge domestic pile up of 2mn tons. Vietnam too is faced with a glut in harvest that means they will have to find new markets for their produce.
Nevertheless, the industry observers said this year also would be a tough one for sugar businesses due to the global economic crisis which had forced buyers with liquidity crunch. Moreover, sugarcane crushing has been delayed several times in most of the Asian countries due to excessive stock.
Experts further stated it was too early to predict a warm reception for Latin American sugar. That is because as far as India is concerned, they are with a carry over of 11mn tons from last year and expected to produce about 20mn tons this season, the combined output far exceeds India’s annual consumption of 22mn tons.
Though the months of October and November registered lowest demand in the recent past of Indian sugar Industry, the Latin American countries were able to export sugar to few mills in India. Traders believe gradual increase in retail sugar prices in last few months may force governments to opt for more imports, and this development is likely to help both Brazil and Guatemala in the coming months.