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.
  

