Global deficit to widen: International sugar body

Global sugar demand will exceed production by a wider margin than forecast three months ago because unusual weather is limiting cane harvests in India and Brazil, the International Sugar Organization said.

Production will trail consumption by 9.35 million tonnes in the year ending September 30, up from 7.8 million projected in May, Sergey Gudoshnikov, a senior economist at the London-based group, said Thursday. The deficit will reduce stockpiles to 38 per cent of projected global use, the lowest ratio in three years, Gudoshnikov said.

The price of raw sugar has jumped 92 per cent this year, reaching a 28-year high of 23.33 cents a pound last week on ICE Futures US in New York, as dry weather in India and excessive rain in Brazil threaten to prolong the shortfall into next year. Lower output in Mexico, China and Pakistan also spurred the rally, analysts said.

 

“Speculators are seeing blood out there,” said Scott Joss, the president of ClearTrade Inc in Chicago. “Funds are still active, and sugar at 30 cents is not out of the question.”

Inventories are likely to shrink next year, Gudoshnikov said.