NEW YORK: A global deficit in sugar supplies in the 2021/22 season is expected to reduce by 42% due to a better than expected sugar production in India, the world’s second largest producer of the sweetener, broker StoneX said on Wednesday.

StoneX raised its estimate for India’s 2021/22 sugar output to 33.2 million tonnes for the October to September period, 5% more than projected in January, as positive weather allowed for higher production.

As a result, the broker said in a report, an expected deficit in the world’s 2021/22 sugar season is now projected at 1.1 million tonnes versus 1.9 million tonnes seen in January.

The International Sugar Organization (ISO) also reduced its view on the global supply deficit late in February.

StoneX said the higher Indian production will offset problems in Thailand and China, where production is seen smaller than expected.

The broker kept its projections for Brazil, the world’s largest sugar producer, unchanged. It expects a sugarcane crop of 565 million tonnes in the new season that starts in April and a sugar production of 34.5 million tonnes, 7% larger than the drought-hit previous season.

Raw sugar climbs to 2-1/2-month high

Despite high energy prices due to the conflict in Ukraine, StoneX sees Brazilian mills continuing to prioritize sugar production instead of ethanol in the new season.

It added Brazilian mills had hedged about 76% of expected sugar production using futures contracts compared to 70% at this time last year.