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Sugar output may exceed demand for a second year after farmers boosted planting as futures surged, pushing prices lower, Standard Chartered Bank said. That may lower costs for drinks makers like units of Coca-Cola Co. (KO)

Sugar futures will average 24 cents a pound in New York in 2011, about 15 percent lower than the average so far this year, before rebounding to 25 cents next year, said Abah Ofon, an analyst at the bank.

Futures surged to 36.08 cents a pound in New York in February, the highest price since 1980, boosting costs for food and drink makers. Coca-Cola Hellenic Bottling Co SA (EEEK), the world’s second-biggest Coke drinks bottler, yesterday reported its first quarterly loss since December 2008.

“The sugar price is coming down in the world market quite dramatically, so that will give us a different cycle for next year,” Robert Murray, chief financial officer at Athens, Greece-based Coca-Cola Hellenic, said on a conference call yesterday. Sugar accounts for 12 percent of the cost of goods sold, he said.

Higher input costs, particularly from sugar and polyethylene terephthalate, a resin used to make plastic bottles, “impacted profitability” in the first quarter, Chief Executive Officer Doros Constantinou said in a telephone interview yesterday.

Thai Output

The sugar market will have another year of surplus in the season beginning October after output exceeds demand by about 1 million metric tons in the current season ending Sept. 30, ending two years of deficits, Ofon said in a phone interview from Singapore yesterday. He did not give a surplus forecast for the next season.

Ofon’s estimate for this year’s surplus matches that of the International Sugar Organization, which raised its outlook on May 5, from 200,000 tons in February.

Cane output in Thailand, the world’s second-largest exporter, may climb to a record 94 million tons this season ending Oct. 31, with sugar production of 9.6 million tons, Prasert Tapaneeyangkul, secretary-general of the country’s Office of the Cane & Sugar Board, said today. Next season’s cane harvest may match this year’s level if the nation doesn’t have a drought or heavy rains, Prasert said.

Still, futures will not collapse as importing countries including China are likely to take advantage of any dip in prices to seek supplies overseas to rebuild domestic stockpiles, Ofon said.

China Purchases

“China would remain a net importer next season,” Ofon said. “It would be looking to buy, should prices dip significantly,” he said, without providing an import forecast.

China’s purchases may rise 35 percent to 2.7 million tons in the year ending September 2012, Paul Deane, an agricultural economist at the Australia New Zealand Banking Group Ltd., said in a May 9 interview.

Futures may rebound in the second quarter of 2012 as supplies from Brazil and Thailand begin to dry out and other exporters including Indiaand the European Union hold back sales to rebuild stockpiles, Ofon said.

“While globally there is a surplus, that surplus is not necessarily going to be exportable,” Ofon said.

Raw sugar for July delivery jumped 4.3 percent in New York yesterday to close at 21.87 cents a pound.

Sugar production in India may reach 24.5 million tons this year, the food ministry said last month. That would be the first time in three years that output exceeded demand.

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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Wheat sowings fall to low, while corn seedings fly

May 10th, 2011

From Agrimoney.com – http://www.agrimoney.com/news/news.php?id=3125

Wheat sowings fall to low, while corn seedings fly
By Agrimoney.com – Published 10/05/2011

Spring wheat planting slowed to its weakest pace since at least the early 1990s in the US, and to a trickle in Canada too, even as America’s corn farmers – in one week – sowed an area equivalent to Denmark and Switzerland combined.

Just 22% of US spring wheat was in the ground as of Sunday thanks to the wet conditions which continue to dog northern areas. In North Dakota, the main spring wheat state, just 7% was seeded compared with an average of more than one-half by now.

The overall figure compared with 61% typically sown at this time, and was the lowest since at least 1994, the earliest year for which readily available US Department of Agriculture data are available.

Indeed, it fell behind the pace of 1997, which has been reported as setting a record slow pace, and when yields fell 15% to 29.9 bushels per acre.

In 1995, another slow year for plantings, the yield ended higher, at 32.2 bushels per acre, but below the 1990s average of more than 34 bushels per acre.

Late snows

The pace was even slower north of the border, where Canadian farmers have planted 3% of their overall spring crops, compared with 40% by now, following snowfalls of up to 25cm, or 10 inches, on some areas two weekends ago. On farms where moisture fell as rain, precipitation reached 5.0cm.

Rain and “moderate temperatures have combined to stymie the general commencement of seeding across the Prairies”, the board said, adding that the poor sowing conditions were affecting “all western Canadian growing regions”.

However, while weather looks set to remain poor for Manitoba and Saskatchewan, “a high pressure system may keep Alberta sunny throughout the week, which could prompt widespread and rapid seeding in that province”.

‘Second fastest on record’

The fate of spring wheat farmers contrasted with that of corn growers who, following a drier spell in much of the Corn Belt, lifting sowings to 40% of their intended crop as of Sunday.

The 27% of the crop sown in one week equates to an area of nearly 25m acres, or nearly 39,000 square miles – bigger than Hungary or South Korea.

The progress was well above trade estimates of seedings reaching aruond one-third complete, and saw farmers play catch up towards average rates.

“Iowa farmers made the most progress, jumping from 8% to 69% complete, the second fastest weekly pace behind 64% completed in one week in 1992,” Kim Rugel at Benson Quinn Commodities said.

East vs west

And the progress was achieved despite wet weather continuing to hamper progress in eastern areas, with farmers in Indiana, Michigan and Ohio having less than 5%of their corn in the ground, compared with one-half typically by now.

“What is remarkable about this week’s progress is that it was accomplished with basically no participation by eastern Corn Belt states,” Steve Meyer at Paragon Economics said.

“Flying into Detroit International on Monday afternoon, it did not appear that eastern Michigan would catch up any time soon. There was a lot of water standing in fields.”

The eastern Corn Belt is due to receive “periodic rain events” throughout this week, Benson Quinn added.

In the six-to-10 day forecast, weather models indicate “scattered showers with cool temperatures over the eastern Corn Belt, while the western Corn Belt and Plains stay dry”, weather service WxRisk.com said.