The world's sugar supply balance is expected to deteriorate in the 2021 22 season that started in October due to higher use of sugarcane to ethanol production in India and lower production in Brazil, according to StoneX.
StoneX projected a supply deficit of 1.8 million tons, 1 million tons more than it estimated in October, as the season will see demand surpass production for the third consecutive year.
Demand was projected at 188.4 million tons, and global production was seen at 186.6 million tons. Demand improved recently as ocean freight prices declined, according to the broker. It saw higher buying from Asian countries and from refining hubs.
India is seen producing a record amount of sugarcane after positive weather, but the country's ethanol blending program will take the equivalent of 3 million tons of sugar out of the market, according to StoneX. The sugar production will be basically the same as in the previous crop, or around 31 million tons.
Production in Brazil's centre-south region is 31.3 million tons, 12% less than a year ago.
StoneX said Brazil's new sugar season, which starts in April, will see a 6% increase in total sugarcane volumes to 565.3 million tons.
Sugar production in the European Union plus the United Kingdom is projected to increase nearly 12% in the 2021-22 October-Sept to 17.2 million tons, as a wetter summer in Europe boosted yields for beet.