DEMAND for sugar is set to surge ahead internationally, consolidating on gains made over the past six months according to ABARES forecaster Benjamin Agbenyegah.
In welcome news for Australian sugar producers, he said the world indicator price for raw sugar is forecast to increase by 26 per cent in 2016–17 to average US21 cents a pound.
Further down the track, he said in 2017-18 he expected a further 5pc rise in values.
Mr Agbenyegah attributed the price rises to simple supply and demand.
“There is an expectation that world sugar consumption will grow faster than production, reducing world stocks and the stocks-to-use ratio,” he said.
World sugar production is forecast to be around 177 million tonnes in 2016–17, up from 173 million tonnes in 2015–16. This forecast reflects an estimated rise in area planted to cane and beet in Australia, Brazil, China, the European Union and the United States.
Lower production is forecast in India and Thailand due to poor seasonal conditions.
Farmers are expected to react to high sugar prices and plant more sugar next year, with ABARES forecasting world sugar production is forecast to increase by a further 4 per cent
to 183.1 million tonnes in 2017-18.
Over the medium term, the world sugar price is projected to ease before rising againto average US23 cents a pound (in 2016–17 dollars) in 2021–22