Major world sugar producers are honing their blades for stiff competition on world markets in 2007 and 2008 as they look to export the bulk of surplus stocks.
Brazil, India, Thailand and Australia all said this week that they would not be stockpiling excess production, even if prices fell below production costs.
With rising Indian output nipping at Brazil's heels, surpluses would no longer be stockpiled, Ravi Gupta, president of sugar and ethanol at Bajaj Hindustan, told a Kingsman Australian Sugar Conference.
"Everyone has seen we can live without stocks," he said, pointing to a de-regulation "sea-change" in India. "Competition between India and Brazil will increase," he said.
Brazil, Thailand and Australia all also said they would not stockpile production.
"Brazil pushes to the limit," Brazil's Lygia Malzoni Romanach, director of Usina Santa Fe, said of output and exports.
Nutthapol Asadathorn, executive director of TRR Sugar Group, Thailand, said: "I can't see that we wouldn't export".
Australia said the same. "Holding production is not an option for the Queensland sugar industry," said Neil Collie, general manager marketing of Queensland Sugar Ltd.
Storage costs prohibited holding onto sugar, he said, adding, "Queensland always competes."
The Lausanne-based brokerage Kingsman SA told the conference this week that world sugar was headed toward a surplus of 9.48 million tonnes in the year to March 2008, up from a surplus of 8.78 million the year before.
Supply was staging a dramatic response to deficits in previous years which sent world prices rocketing to over 19 U.S. cents a lb in early 2006 -- the highest in 25 years -- after glut-induced prices of less than 6 cents a lb in 2004.
Raw sugar futures on the New York Board of Trade fell to 9.24 U.S. cents a lb on Monday before bouncing back to 9.36 cents on Thursday, still their lowest level since September 2005.
Czarnikow, a sugar merchant, told Reuters this week that Brazilian costs of production of around 10 cents a lb would put a floor under world prices, but only after surplus production was "worked out".
None of the big exporters are backing away.
In India, de-regulation was creating larger producers and had broken the boom-bust cycle, Gupta said. Indian sugar's production cost was down to 10 cents, while Brazil's was higher, he said.
This week Kingsman forecast that 25 million tonnes of Indian sugar production in 2006/07 would rise to 26 million tonnes in 2007/08 -- around the same as centre-south Brazilian output in 2006/07. Gupta sees Indian sugar production this year at 26.5 million tonnes, and other forecasts are even bigger.
India's total sugar exports would surge to 2.5 million tonnes in 2007/08 from about 1.1 million tonnes this year before, aided by export subsidies, the U.S. attache also said this week.
Forecasts for Brazil's 2007/08 centre-south sugar production are around 28 million tonnes, up by over 2 million tonnes.
Sucden this week forecast Brazilian sugar for export in 2007/08 would total between 18.1 million tonnes and 19.6 million tonnes, up by between 0.8 and 2.3 million tonnes.
There would be no end to Brazil's capacity growth while banks financed expansion -- and they are still lending, Romanach said.
Australia, usually the world's second-largest exporter after Brazil with around 4 million tonnes for sale, is also heading toward a bigger sugar harvest for 2007/08 of around 5.35 million tonnes, up by around 235,000 tonnes, according to kingsman.
Thailand should also expand to produce 7.6 million tonnes in 2007/08, up from 7.2 million, Kingsman said. Nutthapol said over 4 million tonnes could be available for export.
"Fasten your seat belts," Kingsman director Tom McNeill said.