Sugar Surplus May Exceed 1 Million Tons in 2010-11, ISO Says

Sugar production may exceed demand by 1 million metric tons in the 2010-11 season ending in September on higher output in Thailand and India, the International Sugar Organization said.

The ISO had estimated the surplus at 200,000 tons in February. Thai output reached 9.6 million tons at the beginning of May, up from 7.2 million tons a year earlier, it said in an e-mailed report today. The country is the world’s second-largest sugar exporter, and India ranks second among producers.

“An expected annual output of about 9.65 million tons, raw value, represents a significant improvement over Thailand’s previous production record of 8.06 million tons, raw value, achieved in 2007-08,” it said.

Output in India climbed 24 percent to 22.6 million tons in the first seven months of the 2010-11 season, the London-based ISO said in the report. Brazil is the largest sugar producer and exporter.

Raw sweetener has plunged 35 percent in New York trading this year and white, or refined, sugar has dropped 25 percent in London. “Global fundamentals have shifted from a perceived deficit to a short-term surplus due to a larger-than-expected Thai harvest,” Keith Flury, an analyst at Rabobank International in London, said in a report today.

Hedge funds cut their bullish bets on sugar futures to the lowest in more than two years as supplies surged in Thailand, data from the U.S. Commodity Futures Trading Commission showed on April 29.

“The reported reduction in net long positions may be treated as evidence of fading investors’ interest in sugar futures on the back of expectations for further price easing,” the ISO said.

(Source: http://www.bloomberg.com/news/2011-05-05/sugar-surplus-may-exceed-1-million-tons-in-2010-11-iso-says-1-.html)