The International Sugar Organization sees a modest sugar surplus emerging in 2017-18 as Brazilian producers allocate more cane to sugar over ethanol, the ISO said on Thursday in its first preliminary forecast for next season. The inter-governmental body said it anticipated a surplus of roughly 3 million tonnes in the 2017-18 season, which runs from October to September.
The ISO highlighted top producer Brazil, where producers are expected to boost the amount of cane they allocate to sugar over ethanol. Brazil's key Centre-South region is seen earmarking 48 percent of its cane for sugar next season, versus 46.3 percent in 2016-17.
This is expected to help partly offset the impact of aging cane fields with lower cane yields, after a lack of investment in replanting last year. Cane production in the region is forecast at 596 million tonnes, down from 607 million in 2016-17. Sugar output, meanwhile, is seen at 36.2 million tonnes for 2017-18. The ISO said it continues to regard low global sugar stocks as supportive for the market, even as it inches towards a surplus phase.
"The ISO still believes that any further easing of world prices in response to expectations of a possible return of world supply and demand to a modest statistical surplus in 2017-18 may be muted by a low level of stocks," it said in its report. But further ahead, if producers do not scale back output in 2018/19, the world market could remain in a surplus for a second consecutive season, the ISO said. The ISO also revised its forecast for the 2016-17 global sugar deficit forecast to 6.465 million tonnes (tel quel), from 5.869 million tonnes forecast in February. This was due to cuts in global production to 165.928 million tonnes from 168.334 million tonnes. The ISO forecast that 6.809 million tonnes in stocks would be used in 2016-17.
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