Czarnikow sees big 2004-05 world sugar deficit

Sugar merchant Czarnikow still sees a large drawdown in sugar stocks in 2004/05 but on Friday revised its forecast of the global deficit slightly lower to 4.78 million tone's from 4.85 million previously. Czarnikow's findings contrasted with forecasts of German analyst F.O. Licit, which said last month it expected global sugar output and consumption to be roughly in balance in 2004/05, scaling back expectations of a deficit.
White and raw sugar futures have risen sharply this year, partly on anticipation of a supply deficit next year after successive poor cane crops in India, traders say.
Czarnikow said in its latest review of the market that it had raised its forecasts for output in Brazil, the world's biggest sugar producer, and the EU, and had cut its prediction for output in India, the world's biggest consumer.
"Though we have since made widespread revisions to our individual country forecasts, we are continuing to anticipate a large draw down in stock during the 2004/05 cycle," Czarnikow said.
"Our initial analysis of the 2004/05 statistical balance pointed towards a deficit of 4.85 million tones raw value (metro), including an allowance of one million metro for unrecorded disappearance," it added.
"Our latest figures point to a very similar deficit of 4.78 million metro and reveal that, despite improvements in the production outlook that have taken place in countries such as Brazil and the EU, the macro outlook remains more constructive than it has been at any time during the past 10 years."
In Brazil, stocks of sugar-based ethanol were expected to fall sharply due to a huge rise in demand, Czarnikow said.
"Our analysis points to ethanol stocks being drawn down significantly, whilst sugar stocks are forecast to rise given the expected increase in Brazilian sugar production to 28.315 million metro," Czarnikow said.
The London-based sugar merchant also said that in Europe, wetter conditions had helped beat development and resulted in upward revisions to sugar production forecasts within the 25-nation EU to 20.072 million metros.