International Sugar Organisation Increased Forecast Global Sugar Surplus 2011-2012

International Sugar Organisation has increased its forecast for the global sugar surplus in 2011/12 to 5.17 million metric tonnes in its latest quarterly market outlook, compared with its projection of 4.46 million tonnes made in November .

The ISO now estimates total world production at a record 173 million tones with beet sugar production expected to account for most of the increase - with growth of more than 6.1 million tonnes on the year. Cane is likely to demonstrate a more modest 1.9 million tonne increase, despite a significant decrease in sugar output from Brazil.

The ISO expects global consumption to reach 167.83 million tonnes, with "healthy" 2.32% growth on the year, compared to 0.34% in 2010/11 and 0.93% in 2009/10.

Upward revisions for production mean that stock rebuilding should accelerate in the second half of the season with the stocks to consumption ratio rising to about 37% which is likely to put bearish pressure to world prices.

In the midst of global surplus production and high competition, India, world’s second largest producer of sugar, struggles to find importers and till now has exported around 5 lakh ton (0.5 million tons) for 2011-12.

Till now, the exports was mainly to Africa, Sri Lanka and Australia.

According to Swiss Kingsman SA, the global sugar production is expected to be around 176 million tons and consumption is expected to be around 170.6 million tons from 2011-12.

Meanwhile, India is expected to produce around 26 million tons of Sugar and consumption is estimated to be around 22 million tons.

With the record surplus production of the country, the government has allowed 2 million tons for exports but the country is presently facing difficulties in exporting the commodity due to higher production in other major growing areas.

India had exported 2.6 million tons of sugar during 2010-2011.

Presently, Sugar futures in Inter-Continental Exchange (ICE) and in India's National Commodity and Derivative Exchange (NCDEX) are trading up.

Sugar for March delivery, in ICE traded up 0.18 cents to 25.94 cents per lb on 23rd February.While in NCDEX, the commodity traded up 0.21% to Rs 2861 per qtl on 24th Febraury at 11:15 IST.