LONDON: The International Sugar Organization said on Tuesday it was forecasting a small global sugar deficit of 724,000 tonnes in the 2020/21 season as consumption rebounds from Covid-19-related weakness in the prior season.

The inter-governmental body, in a quarterly report, also sharply reduced its forecast for the size of an expected deficit in 2019/20 to a marginal 136,000 tonnes from 9.3 million tonnes partly driven by a downward revision to consumption.

"The unprecedented Covid-19 impact on consumption in 2020 is not expected to be repeated. Instead we anticipate a substantial reversal as industries and governments focus on re-engaging the economy," the ISO said.

The ISO forecast that global sugar consumption would rise by 2.6% in 2020/21 (October/September) to 174.19 million tonnes, tel quel, while production was projected to rise by 2.3% to 173.46 million.

The report said no assessment of the impact of Covid-19 on consumption in 2020/21 had been made at this stage, noting it was unwise to pre-judge future movement restrictions or their impact.

"While it is broadly perceived that the pandemic will not end until a vaccine is found, the impact on global sugar consumption has so far been defined as a function of a restriction in movement and out-of-home consumption rather than a change in personal consumption habits," the ISO said.

The ISO said the expected rise in production in 2020/21 was driven partly by a recovery in Indian output to 31.5 million tonnes, up from the prior season's 27.2 million.

This was partly offset by a forecast fall in production in Brazil to 34.7 million tonnes from 37.4 million in 2019/20.

Weak demand for ethanol linked to lockdowns to slow the spread of Covid-19 has led mills in Brazil to increase the proportion of cane they use to make sugar rather than the biofuel during the current 2019/20 season.

The switch contributed to the sharp drop in the size of the forecast global deficit in the 2019/20 season.-Reuters