Datagro sees record two-year world sugar surplus, even as Brazil curbs output

NEW YORK (Reuters) - Brazilian consultancy Datagro on Wednesday said it sees a record two-year global surplus of sugar supplies, citing swelling output in Asia even as millers in top producer Brazil dial back production.

The world will see a surplus of 7.56 million tonnes in the season beginning Oct. 1, an upward revision from a previous forecast of about 6.3 million tonnes, Datagro President Plinio Nastari told reporters along the sidelines of New York "Sugar Week."

That will follow a surplus of 10.79 million tonnes in 2017/18, marking the largest two-year surplus on record, Nastari said, noting swelling supplies even as millers in Brazil's center-south sugar region reduce their output of sugar in favour of producing more ethanol.

 

Datagro maintained its outlook for a reduction in supplies from center-south, because of cane quality issues and as millers opt to produce ethanol instead of the sweetener. The center-south will produce 30.8 million tonnes of sugar and 26.9 billion litres of ethanol, representing a sugar mix of about 42 percent.

"In center-south, the quality of cane is not looking good," Nastari said, citing dryness and pests.

India, the world's second-largest producer, will churn out 31.5 million tonnes of refined sugar this year, Nastari said. Thailand's output will be 14.76 million tonnes, raw value.

Some smaller mills in Brazil will shut this year as a result of financial strain as prices plumb 2015 lows and tumble below the cost of production, Nastari said. But others are starting to reopen, including two mills that were reopened by new owners.

(Reporting by Chris Prentice; Editing by Steve Olrofsky)