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NEW YORK: The global sugar market is likely to see a relatively large surplus of 4.1 million tonnes in the new season starting October, as a 5% production increase in Asia will more than compensate a small rise in demand seen at 1.1%, broker and analyst StoneX said on Tuesday.

India, the world’s second-largest producer after Brazil, is expected to have an even better crop in 2022/23 after its massive production in the previous season, which StoneX revised upward to 35.5 million tonnes. The country is seen producing 36.5 million tonnes in the new season.

“In addition to more attractive prices and government incentives, production in Asia should also benefit from the weather,” StoneX said in a presentation in New York which this week hosts the Sugar Week, a series of seminars and social interactions among market players.

The broker expects Thailand to increase production from 10.1 million tonnes in 2021/22 to 11.5 million tonnes in the new season. China is seen boosting production by 400,000 tonnes to 10.3 million tonnes.

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The higher Asian output will offset a small downward adjustment for sugar production in top grower Brazil, where StoneX expects mills to divert a bit more sugarcane to ethanol.

The broker cut its projection for cane allocation to sugar production from 45.5% in March to 44.8% now. With that, it sees Brazil’s Centre-South region producing 33.9 million tonnes versus a previous forecast of 34.5 million tonnes.

Ethanol currently gives better financial returns to mills than sugar as energy prices have risen globally.

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