RECENT SUGAR FALL SPARKS SOVIET, CHINESE BUYING
The recent fall in world sugar prices,
due to increased producer pricing sales and evidence of export
availability, has encouraged renewed buying interest from China
and the Soviet Union, London trade house E.D.And F. Man said.
    Further purchases are expected by the Peoples Republic of
China at the lower end of the recent price range, which should
limit the downside movement, it said in its latest monthly
market report.
   "And it is believed that the Soviet Union will need to return
to the market to take a further 250,000/350,000 tonnes for
May/June shipment, Man added.
    The Soviets purchased five cargoes of raws for April/May
shipment towards the end of last month, which brings its total
purchases to around 1.65 mln tonnes, Man said.
    Production estimates for the Thai crop now exceed 2.3 mln
tonnes and the final outturn appears set to reach around 2.5
mln tonnes. However, this upturn in the Thai crop is being
countered by a reduction in China's production forecast to 5.3
mln tonnes from 5.5 mln estimated earlier.
    Market participation by Cuba suggests that its crop could
be close to last year's 7.3 mln tonnes. But even with similar
production Man expects Cuban exports to be significantly down.
    Cuba was reported to be carrying 1.3 mln tonnes of stocks
in September 1985, of which some 440,000 tonnes were used to
boost its 1985/86 exports to about 6.9 mln. But as it will not
be able to draw on surplus stocks this year, Man estimates
Cuba's export availabilty will be reduced to 6.4 to 6.5 mln
tonnes.
    However, Cuba is only one of a large number of exporters
with reduced availability, Man said.
    Since 1980 the total free market export supply has fallen
to 18 mln from about 22 mln tonnes. But at the same time free
market demand has also fallen by almost the same amount, which
has left exporters chasing falling import requirements.
    A fairly tight balance now appears to have emerged. But the
difficult task of keeping production advances at bay still
remains, as at least one more season of production deficit is
needed to eliminate some of the remaining surplus stocks still
overhanging the market, Man said.
    The increasing cases of record production as a result of
record yields and better husbandry have forced sugar producers
to strive for greater efficiency.
    As this increase in efficiency reduces the marginal cost of
production, sugar exporters may become more responsive to
prices and in particular to upward price movements, Man said.
    Commenting on the current row between the EC Commission and
sugar producers, Man said despite the recent improvement in the
level of restitutions, they are still insufficient to fully
compensate producers when exporting on the world market.
    Unless there are further improvements, at least some sugar
is expected to remain in intervention, it added.
 REUTER
