The International Sugar Organisation on Monday increased its forecast for a projected global sugar surplus in 2011/12 to 5.17 million tonnes, up from a forecast of 4.46 million issued in its previous quarterly update. World production in 2011/12 was seen at a record 173.00 million tonnes, up 4.9 percent from the previous season, with consumption climbing 2.3 percent to 167.83 million, the ISO said in a quarterly market outlook.
The upward revision in the surplus was driven by expectations of significantly higher output in several key producers, such as Russia, the EU, India, Pakistan and Ukraine, despite a cut in top producer Brazil's projected output. "Expected losses in export availability in Brazil are likely to be counter-balanced by higher deliveries from a number of key players including Australia, the EU, India and Thailand," the London-based ISO said.
The ISO expects world exports to grow marginally to 53.275 million tonnes, up 51,000 tonnes from the previous year. World import demand is expected to decrease on the back of higher output in importing countries, the ISO said. Imports are projected at 49.151 million tonnes, raw value, as against 52.765 million tonnes estimated for 2010/11 and the record level of imports at 55.403 million tonnes in 2009/10.
The upward revisions for output in 2011/12 mean that the ISO anticipates that stock rebuilding will accelerate in the second half of the season. The current season started with a very low level of stocks, it added. "If the currently anticipated differential between export availability and import demand (about 4.1 million tonnes) goes to stocks at the end of the season, the stocks/consumption ratio will rise to about 37 percent," the ISO said. "This is likely to put bearish pressure on world prices."
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