NEW YORK- The coronavirus pandemic is seen cutting global sugar consumption by 2.5 million tons in the 2019-20 season (Oct-Sept), helping to sharply reduce an expected supply deficit, but a recovery is seen, analysts S&P Global Platts said on Friday.
Pandemic stay-at-home measures reduced sugar use globally. They also led to a fall in ethanol consumption and prices in Brazil that pushed mills there to maximize sugar production, erasing a global deficit that was previously projected at nearly 7 million tons, it said.
S&P Global Platts now sees the global sugar supply deficit in 2019-20 at only 260,000 tons, but it projects the deficit increasing in the new season (2020-21) to 1.14 million tons as sugar consumption recovers to grow 1.5 percent.
The analysts see a positive price outlook for 2020-21, estimating raw sugar futures to rise to around 14.5 cents per pound due to the demand recovery and a larger use of ethanol in Brazil, which would reduce sugar production in the country.
They estimate Brazil’s center-south sugar production in 2020-21 to fall to 32.8 million tons from 37.1 million tons in the current crop.
The projections were released during an online sugar conference promoted by S&P Global Platts on Friday, when other analysts and traders shared their views on the market.
Trader John Stansfield from Group Sopex sees 2.2 percent growth of consumption in 2020-21, “largely due to Chinese consumption growing strongly.”
Participants agreed that India’s export policy is key to projecting future market direction.
S&P sugar analyst Maria Nunez said India is the “black swan” for the market, wondering if the country’s government is indeed looking to cut export subsidies and boost local ethanol production.