The Dutch bank predicts sugar supply balance as India expected to up production by 16 per cent in 2020/21

Global sugar consumption should grow 1.9 per cent in the 2020/21 season (October-September) after a fall of 1.5 per cent in 2019/20 due to the Covid-19 pandemic, which will partially offset an expected production increase, Rabobank said on Wednesday.

In its quarterly report on the global sugar market, the Dutch bank revised its view for the sugar supply balance in 2019/20 from a deficit of 4.3 million tonnes to a deficit of 1 million tonnes, due to higher production in Brazil and lower demand.

It sees the balance shifting to a small surplus of 2,00,000 tonnes in 2020/21, as India is expected to increase production to 33.5 million tonnes, up 16 per cent from 2019/20.

Rabobank, which specialises in the agricultural sector, kept its view for Brazil’s Center-South output at 36.4 million tonnes, while projecting production in Thailand at 7.8 million tonnes, a 10 per cent decrease from 2019/20.

“Revisions that have lowered our 2019/20 deficit and created a small 2020/21 global sugar surplus point to a well-supplied market in the coming 12 months,” the bank said.

“In turn, this suggests that raw sugar prices will continue trading in a USc 11/lb to USc 13/lb range - constrained to the downside by Brazil’s ethanol parity and to the upside by India’s export parity,” it said.