Sugar prices to rise further, global deficits expected

LONDON: Raw sugar is forecast to end this year with an annual gain of more than 30% as a diminished outlook for production in Brazil helps swing the global market into deficit, a Reuters poll of 11 traders and analysts showed on Friday.

Prices were seen ending 2021 at 20.5 cents per lb, up 4% from Thursday's close and 32% above levels at the end of 2020, according to the median forecast.

White sugar prices were seen ending 2021 at $520 per tonne, up 5% from Thursday's close and 24% above levels at the end of 2020.

The poll consensus was for a global deficit of 1.8 million tonnes for the 2020/21 season followed by a deficit of 2.0 million tonnes in 2021/22.

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"We think that lower production in Brazil due to the earlier drought and recent waves of frost, coupled with higher global consumption, will ensure that sugar prices remain relatively high for the rest of this year," Capital Economics analyst Samuel Burman said.

Poll participants had a median forecast of 32.9 million tonnes for Centre-South Brazil sugar production in 2021/22, well below the consensus in a poll issued in February of 36.2 million, with the outlook diminished by drought and frosts.

The region had record high sugar production in 2020/21 of 38.46 million tonnes.

"If CS Brazil sugar production falls below 31 million tonnes the New York (raws) market may well need to go towards 22 cents per lb," Group Sopex analyst John Stansfield said.

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CS Brazil cane production was seen at 530 million tonnes with 45.7% of the cane used to produce sugar. Cane is also used in Brazil to produce the biofuel ethanol.

India's sugar production was seen edging higher in 2021/22 to 31.5 million tonnes, up from 31 million in 2020/21, according the poll's median forecast.