Page 35 - MSM_AR2020

SUSTAINABILITY EFFECTIVE CORPORATE FINANCIAL ADDITIONAL DETAILS OF THE ANNUAL
REPORT LEADERSHIP GOVERNANCE STATEMENTS INFORMATION GENERAL MEETING

MARkET

LANDSCAPE

MARKET OVERVIEW 2020

Global sugar production is expected to increase by 6.2 million tonnes for the 2020/2021 season from the 179.7 million tonnes
produced last season. This is due to the increase in production in Brazil from 26.6 million tonnes last season to 38 million
tonnes expected currently, offsetting the reduced production in Thailand, which has suffered dry-weather in key-planting areas.
Thailand’s production is estimated to be around 7 million tonnes, down by 1.6 million tonnes from last season, and almost half
of its normal annual sugar production of 14 million tonnes.
Raw sugar prices (NY11) reached the peak of USD15.89 cents/lbs early part of the year and slumped to USD9.21 cents/lbs mirroring
the drop in crude oil prices in April 2020. Raw sugar prices are expected to trade with an upward bias in 2021 as the correlation
with the crude oil pricing remains strong, prompting millers in Brazil to produce more ethanol instead of sugar. This, in-turn is
expected to reduce the availability of Brazilian sugar for the next season. 33

2020/2021 SUGAR OVERVIEW

COUNTRY OVERVIEW

UNITED STATES US’s sugar production is estimated to be around 9 million tonnes this season (5 million
tonnes from Beet, and 4 million tonnes from Cane), an increase by about 1 million tonnes
from last season. US is expected to import another 3.4 million tonnes with 1.16 million
tonnes coming from Mexico to meet its 12.3 million tonnes consumption. MSM MALAYSIA HOLDINGS BERHAD Annual Report 2020

BRAzIL Brazil is expected to produce about 38 million tonnes for the 2020/2021 season,
an increase from 26.6 million tonnes last season, helped by good weather conditions
in key planting areas. Sugar production in Brazil is heavily influenced by ethanol and
crude oil prices as millers can choose to switch to Ethanol production from the same
sugarcane. Ethanol is a substitute for Petrol in Brazil.

INDIA India is expected to produce about 31.5 million tonnes for this season, an increase
by about 5 million tonnes from last season. However, exports are targeted to
high-premium paying countries such as Indonesia due to the lower-than-expected
quantum of exports subsidies by its government last year.

THAILAND Thailand’s cane crops are expected to recover in the 2021/2022 season provided
that rainfall and plantings are consistent. Production has been severely affected by
the prolonged dry weather and increased competition from Cassava which saw the
production numbers drop by half from its normal annual production. With the current
higher prices of sugar globally, farmers will be incentivised to plant more cane.