Ethanol production rise puts pressure on global sugar supply

Ethanol production rise puts pressure on global sugar supply
While India produced a record harvest in the current sugar production season, an increase in uptake for its ethanol blending programme could exacerbate the global supply deficit. Photo: Pixabay
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Global sugar supplies are expected to tighten again, following the forecast for a fourth successive global deficit in the 2022/23 marketing year, Tropical Research Services (TRS) said in a recent report.

In its initial estimate for 2022/23, TRS projected a deficit of 4,04 million tons, while the stocks-to-use ratio was expected to fall to 38,7%, the lowest level since the 2004/05 marketing year, Reuters reported.

The report stated that global sugar consumption would likely rise 1,4% to 188,16 million tons in 2022/23, in line with the 10-year average growth rate before the COVID-19 pandemic, while a slightly higher 1,5% growth rate was seen in 2021/22.

The global sugar deficit for the 2021/22 season was expected to be 6,63 million tons.

“Our estimate for global sugar consumption in the 2021/22 marketing year assumes that widespread immunisation against COVID-19 in the main world economies will allow a broad economic recovery in 2022,” the report said.

Global sugar production was forecast at 184,12 million tons in 2022/23, up from the 178,86 million tons recorded this past season, with higher output seen in southern Brazil, Thailand and Russia, according to the report.

Despite India, the world’s second-largest sugar producer, harvesting a record volume of sugar cane this season, following favourable weather conditions, the equivalent of three million tons of sugar were likely to be taken up by the country’s ethanol blending programme, and could weigh on global prices.

This was further expected to result in India’s sugar production remaining at the same level as the previous crop (about 31 million tons), commodity broker StoneX told Reuters.
Brazil, the world’s largest sugar producer, also reported lower production volumes this season with the country’s centre-south region harvesting 31,3 million tons, 12% less year-on-year.

The forecast for that country’s upcoming sugar season starting in April, indicated a 6% improvement in production volumes to 565,3 million tons.

Sugar production in the EU and the UK was projected to rise nearly 12% in 2021/22 to 17,2 million tons, as a wetter summer in Europe boosted yields for sugar beet.

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