Sugar deficit forecasts to rise on lower Indian and Thai output

Analysts are scaling back sugar output forecasts for India and Thailand because of drought-eroded yields, increasing the likelihood of upward revisions to global deficit forecasts for the 2015/16 season.

The International Sugar Organisation (ISO) is expected to publish its latest global sugar balance numbers in its quarterly report on Tuesday.

In a presentation on Friday FO Licht said it had increased its global sugar deficit forecast to 6.5 million tonnes (mt) in 2015/16 from a previous forecast of 5.2 mt after downward revisions in the crop outlook in India and Thailand.

In India, the world’s second-largest sugar producer behind Brazil, sugar mills are closing operations ahead of schedule because of cane shortages caused by drought, mill executives said.

Broker Marex Spectron said it believes that Indian output will be below the Indian Sugar Mills Association’s (ISMA) estimate for sugar production of 26 mt in the 2015/16 season that began on October 1 after drought hit plantations in the leading cane-growing region of Maharashtra.

Premature end to harvest “In Maharashtra, 33 mills have already closed, against 11 at the same time last year,” Marex Spectron said in a note on Sunday. “It is clear that in Maharashtra and Karnataka, the harvest is going to come to a premature end.”

The ISO is likely to raise on Tuesday its 2015/16 global sugar deficit forecast to about 5 mt, from its latest published forecast for a deficit of 3.5 mt made in November, said Sergey Gudoshnikov, a senior ISO economist.

Gudoshnikov said that the ISO had scaled back its estimates for Indian output by 500,000 tonnes and in Thailand, the world’s second-biggest sugar exporter behind Brazil, by 650,000 tonnes.

“Thailand has had low cane yields and the net result is the reduction of the crop,” Gudoshnikov said.

London-based ISO has also cut its output projections for the EU and Brazil, but it has raised production forecasts for Russia, the US and Ukraine, saying that it expects lower consumption growth.

Claudiu Covrig, senior agricultural analyst with data provider Platts, said he expects to raise the global 2015/16 sugar deficit forecast by between 100,000 tonnes and 200,000 tonnes, due in part to reduced output forecasts for India and Thailand. On January 31, Platts forecast a 4.9-mt global sugar deficit in 2015/16 (October/September).