The global sugar market is facing its largest supply deficit in five years – in the vicinity of 8.2 million tonnes – following production cuts in India, Thailand and the EU, according to Rabobank’s latest global Sugar Quarterly report.

The supply deficit is about three million tonnes more than anticipated just three months ago and largely due to climate challenges, such as early-season dryness in India, followed by flooding.

Thai production is expected to drop due to drought earlier in the year, while in the EU the planted area has been scaled back in response to lower price signals.

These factors have driven a “notable adjustment in market sentiment”, the report says.

In coming months, Indian and Thai sugar harvests will be subject to close scrutiny, while broader macroeconomic and political factors will also have the potential to impact the sugar market.

Brazil and India are currently still the world’s top sugar producers. Brazil’s production is estimated down slightly to 29.4 million tons due to more sugarcane being diverted towards ethanol production.

Consumption of sugar is projected to continue to rise due to record use in India.

Meanwhile in Australia, the pace of sugar harvest has caught up with last season, after lagging throughout, with the harvest now essentially finished, according to the report.



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