Bloomberg News

ISO Raises Sugar Surplus Forecast by 25% on Asian Output

May 11, 2012

The global sugar surplus for the current season ending Sept. 30 will be 25 percent bigger than estimated on higher output from countries in Asia, according to the London-based International Sugar Organization.

Sugar supplies will outpace demand by 6.5 million metric tons in 2011-12, up from a February forecast of 5.2 million tons, the organization said in a report e-mailed today. The surplus comes after two years of shortages and a season in which production about matched consumption, the ISO said.

Global sugar production will rise by 9.6 million tons to a record 173.8 million tons in 2011-12, with bigger crops in Thailand, China, India, Russia and the European Union, the ISO said. World consumption will gain by 3.7 million tons, or 2.3 percent, to 167.4 million tons, the organization estimated.

“Our previous projections for a number of Asian key producers, including China and Thailand, were too conservative,” the ISO said in the report. “A new production record is projected despite a significant decrease in sugar output anticipated for Brazil,” the world’s largest producer.

Production in the 2011-12 season in Brazil dropped for the first time in a decade as dry weather, frost and flowering cut yields, according to industry group Unica. Harvesting of the 2012-13 crop, which starts in October in most countries, is already under way in the South American nation.

The world sugar surplus may fall to 4 million tons in the 2012-13 season, with smaller crops in India and the EU, the ISO estimates.

“For the time being, the return of a large-scale deficit such as that seen by the world sugar market at the end of the previous decade looks rather remote,” it said.

The surplus is likely to put pressure on prices, according to the report.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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