The global sugar surplus has reached frightening proportions and will continue to hold world prices at low levels, the head of the International Sugar Organisation told Reuters.
The main cause of the surplus - strongly rising Indian production of well over 30 million tonnes forecast for 2007/08 - had become a matter of great concern to exporters and markets, Peter Baron, executive director of the ISO, said in an interview at the Asia International Sugar Conference 2007 on the Indonesian resort island of Bali.
"The (world sugar) surplus looks frightening," Baron said. The ISO recently increased its forecast of world sugar surplus for 2007/08 to 10.8 million tonnes, from 10.3 million tonnes in 2006/07, primarily because of big new production from India.
Baron said he was pessimistic about world market prices, which have already fallen to near 21-month lows of around 9.5 US cents a pound. "Only hopeless optimists can hope," Baron said, when asked for his view on sugar prices. The market was now approaching a point where production costs in the world's leading producer, Brazil, were capping world prices.