The International Sugar Organization (ISO) on Thursday raised its 2015/16 global sugar deficit forecast and said the shortfall could extend into the following season.
In its latest quarterly report, the London-based ISO raised its forecast for the 2015/16 deficit to 3.5 million tonnes from a previous projection of 2.5 million tonnes.
"This mainly reflects a considerable downgrading of production projections for India, the EU and Ukraine," it said.
ICE raw sugar futures touched a nine-month peak on Tuesday, fuelled by growing sentiment that the global sugar market was shifting into deficit after several years of surpluses.
Similar to the previous season, the market is expected to be heavily shaped by developments in three sugar giants—Brazil, China and India, the ISO said.
"No shortages in physical supply to the world market are currently foreseen as global export availability and import demand appear well balanced," the report said.
"It still seems possible to cover currently unforeseen production shortfalls by stocks accumulated during several seasons of global surplus. However, the trade balance is very tight."
The ISO said the deficit was likely to reduce the stocks-to-consumption ratio in 2015/16 by a noticeable 3.16 percentage points to 47.3 percent.
Looking to the 2016/17 season, the ISO said that, assuming normal weather conditions in the coming 21 months, only a limited season-on-season increase in global output was forecast, while global consumption may grow by about 3 million tonnes.
"As a result, a deficit of about 6 million tonnes is still on the horizon, heralding the continuation of the deficit phase in the world sugar cycle for at least one more season," it said.
Source: www.in.reuters.com