Global sugar production will fall short by 2.4 million metric tons of the expected consumption in the 2023/24 crop year that started in October, said consultancy CovrigAnalytics in a report on Monday, raising its supply deficit estimate by 200,000 tons.
It said rising production in Brazil, Russia and China will not be enough to offset heavy losses in production in India and Thailand, mainly, where crops suffered with insufficient humidity.
The deficit rose despite a big cut on China's sugar demand of 440,000 tons.
CovrigAnalytics sees global 2023/24 sugar production at 187.5 million tons, down from 189.4 million tons in 2022/23.
Annual sugar demand was estimated at 189.8 million tons, up from 188.16 million tons 2022/23. So, countries will continue to eat into existing low stocks.
"Therefore, the NY11 (sugar futures) prices could remain trading in a range - 2-3 cents per lb up or down from current levels - as the supply and demand figures don’t show now a massive bullish or bearish market," said the report.
CovrigAnalytics said that importing countries are already having difficulties in buying sugar at current high levels.
Raw sugar futures hit a 12-year price peak last week at ICE exchange.
"Africa is struggling to get hard currencies and pay the same amount of dollars for less volumes, China and South Korea might be switching more sugar to other sweeteners (corn syrup)", it said. (Reporting by Marcelo Teixeira; Editing by David Gregorio)