NEW YORK — The world has never been so awash in sugar.
Just as cane harvests expand in India and Thailand, farmers in Brazil, the world’s largest producer, are ramping up exports to take advantage of a tumble in the exchange rate that has swelled their profit margins. And crops that were hurt by drought last year have been revived by rain. Global output is set to exceed demand for a fifth straight year, leaving the biggest stockpiles on record, the International Sugar Organization said.
All of that sugar signals that global prices, already down 50 percent in three years, are poised to fall further, cutting costs for buyers like Krispy Kreme Donuts and Mondelez International, the maker of Cadbury chocolates and Oreos. New York sugar futures probably will slide 6.2 percent by July to 12.02 cents a pound, the lowest since January 2009, a Bloomberg survey of nine analysts showed.
“The fundamentals are absolutely bearish,” said Donald Selkin, who helps manage about $3 billion of assets as chief market strategist at National Securities Corp. in New York. “Supplies are very extensive. The good growing season and the weak currency in Brazil are also making their exports more attractive.”
Global production in the year ending Sept. 30 will exceed demand by 620,000 metric tons, leaving record stockpiles of 79.89 million tons, or almost enough to supply the world’s top seven consuming countries, data from the London-based sugar organization show. India, the second-largest producer, will have the biggest harvest in three years at 26 million tons, a Bloomberg survey showed. A Thai industry group estimated cane output rose 6.1 percent this season.