Sugar traders are bracing for a wild ride. While most analysts forecast a return to surplus in the 2017-18 season that starts in October, many are considering “best case scenarios,” Michael Gelchie, a trading director at Sucres et Denrees SA, or Sucden, said at the Dubai Sugar Conference on Sunday. With global stockpiles forecast to fall to their lowest since 2011-12, there’s little room for weather disruptions that could hurt crops.
Analysts are counting on a rebound in Asian output, a bigger crop in the European Union and stable production in top grower Brazil. But with about eight months to go before the start of the new season, a lot could go wrong. Brazil needs to receive more rain through at least March and then have dry weather to facilitate harvesting from April, according to Cofco’s de Andrade and Paulo Roberto de Souza, chief executive officer at Copersucar SA, a Sao Paulo-based company with 35 associate mills.