Sugar prices already reflecting global deficit: Rabobank

In the agro space, sugar prices have gained both in the domestic and international markets. Global consumption is expected to touch a record 173.6 million tonnes while production is estimated to come in at 169.3 MT.

Carlos Mera Arzeno, Senior Commodity Analyst, Rabobank, in an interview to CNBC-TV18, spoke about the outlook for agro commodities, especially sugar.

Below is the transcript of the Carlos Mera Arzeno's interview with CNBC-TV18's Manisha Gupta

Q: What is your sense first of all on the sugar prices because the deficit numbers do look bullish and the expectation is that we might see them extending up to 2018 as well? A: We have seen increase in deficit estimates since February really. These are not just our estimates, it is really from across agencies and government bodies and sugar association. We do expect as well the current speculators long in the market to continue long. I think funds at the moment they are looking forward to particular things, one is inputs into India. We do believe funds are expecting for that to happen. Other thing they are looking for is probably to see a lower production in Brazil. It has been raining in Brazil in last week and that has been rut the sugar harvest but I think what funds are looking for in particular is to see lower cane availability later in the harvest. Q: You had mentioned about on how India perhaps could see imports in the next year but do you see that as a big number because the market really is a bit concerned about that and of course Indian government measures to make sure that the prices do not run up too much? A: I can't really put a number to it but I think it will be completely after the big season, may be at the end of Q4 this year or Q1 next year. Q: What is your sense also coming in for the prices then? We already have seen nearly doubling up of prices in sugar from where there were in previous year. Do you think much of the news has been factored in by the markets as of now? A: I think the price fully reflects the global deficit in the market. However, funds might be looking for the bigger bullish news that will be either an announcement of imports into India or lower sugar availability in Brazil.