| NEW YORK
NEW YORK May 13 Copersucar SA, the world's
largest sugar trader, forecast on Tuesday the global sugar
market will swing into a deficit next season due to lower Brazil
output, joining a chorus of influential market participants who
see supplies tightening.
Chief Executive Officer Paulo Roberto de Souza told Reuters
he sees a world deficit of 2-3 million tonnes for the season
starting on Oct. 1 following a "small" surplus this year and
ending four years of oversupply, as the country's struggling
millers reduce spending on cane plantings.
It is the sharpest warning from a series of increasingly
bullish outlooks on Tuesday as producers, merchants and
consumers gathered in New York for sugar week, helping send raw
sugar futures to a near two-week high.
Raw sugar futures were higher with ICE July settling
up 0.51 cents, or 2.9 percent, at 17.80 cents a lb, supported by
a slower than expected start to Brazil's harvest and the
forecasts for global deficits in 2014/15.
The news will likely fuel concerns about the impact of a
prolonged drought in Brazil, the world's No. 1 producer, which
is helping transform the supply-demand outlook for the year
ahead. Raw sugar prices have languished near 3-1/2-year lows set
earlier this year.
Unica, the sugar and ethanol industry association, cautioned
on Tuesday that mills in Brazil, the world's No. 1 exporter, are
off to a slow start this season due to the drought and debt
Productivity and yields may worsen, Copersucar's de Souza
"When the market is like this, you don't renew the cane as
you should," he said.
Older cane is more susceptible to the impact of unfavorable
weather, including the increased rains that Brazil could expect
if El Nino conditions return later this year.
Data provider Platts Kingsman on Tuesday forecast a supply
deficit of 239,000 tonnes of sugar next year, following a
4.3-million-tonne surplus this year.
The International Sugar Organization earlier in the day said
the market may be heading toward balance next season after a
4.4-million tonnes surplus in 2013/14, even as global stocks are
expected to swell to about 45 percent of world demand in October
Copersucar maintained an earlier forecast for cane output in
Brazil's key center-south growing region in the 2014/15
(April-March) season falling to about 570 million tonnes from
596 million in the previous harvest, but "the risk is to the
downside," de Souza said.
A turnaround would be a relief for millers in Brazil and
other key sugar producers that have struggled as capacity
increases have outstripped world demand growth in recent years,
sending prices to close or below breakeven.
The shift to deficit may come as early as this season, said
Bruno Lima of INTL FCStone in Brazil at the New York sugar week
"We could see our first deficit in years ... depending on
Brazil's center-south performance," Lima said, though he
declined to specify the exact size of the deficit.
(Additional reporting by Reese Ewing in Sao Paulo and David
Brough in London; Editing by Marguerita Choy)