NEW YORK (Reuters) - A global sugar deficit of 2.34 million tonnes is seen developing in the 2019/20 season, compared with a 0.48 million-tonne surplus in 2018/19, as output from major Asian players is set to fall, said Plinio Nastari, president of consultancy Datagro.
The global sugar market has been weighed down this season by plentiful supplies, especially from India. Expectations that output there and in Thailand will fall in 2019/20 should help buoy the market, but high stockpiles in both countries and rising production elsewhere could limit gains.
Indian production is forecast to fall to 29.1 million tonnes from the record-large 33.2 million tonnes seen in the previous season, Nastari said during an industry event at New York Sugar Week.
Still, this forecast is weather-dependent, Nastari said. “Depending on the intensity of monsoon - India may surprise the world with another large production number.”
Historically, most Indian sugar is consumed domestically, but production growth has begun to outstrip demand growth, prompting a ramping up of exports. Concerns about these potentially government-subsidized exports helped send sugar prices to a 10-year low of 9.83 cents per pound in September.
India is “overcoming doubts on logistical bottlenecks” when it comes to exports, Nastari said. “Over ample stocks, India may see no other solution than to maintain support on sugar exports in 2019/20 in order to balance the domestic market.”
Output in Thailand, the world’s second-largest exporter, is seen falling to 13.5 million tonnes from 14.55 million in 2018/19, Nastari said, as farmers switch to more lucrative cassava. Still, “ending stocks are expected to swell up in 18/19 as well as in 19/20 unless Thailand finds new homes for its exportable surplus.”
Rising production in other parts of the world, however, will help limit the size of the global deficit.
In Brazil’s main cane-growing center-south region, output is expected to rise to 28 million tonnes from 26.5 million tonnes in 2018/19. And compared with last year, more of this cane will be used to make sugar rather than ethanol, with the region’s sugar mix seen at 36.4% for 2019/20 compared with 35.2% in the previous season.
Sugar production in the European Union, meanwhile, is expected to rise about 3.9% year on year to hit 18.32 million tonnes as higher yields offset lower beet acreage.
Reporting by Ayenat Mersie; Editing by Bernadette Baum and Jonathan Oatis