LONDON: The International Sugar Organisation said on Friday it forecast a global sugar surplus of 5.0 million tonnes in 2017/18 compared with a deficit of 3.1m in 2016/17.

Sugar production was expected to climb by 6.6 per cent to 179.4m tonnes while consumption was seen rising by just 1.7pc to 174.4m, the inter-governmental body said in a quarterly report.

The rise in production was driven by gains in India, the European Union, Thailand and China.

The ISO also said the first tentative indications pointed to a possible global surplus of 3m tonnes in 2018/19.

“With a second surplus season on the horizon, the imminent picture does not look too promising (for prices),” it said.

Raw sugar futures rose to a 5-1/2 month high of 15.42 cents per lb on Friday boosted partly by a switch in Brazil towards using more cane to produce ethanol rather than sugar.

“The ISO expects that even a further rise of the ethanol share in the production mix in Brazil may be only enough to reduce the world surplus in 2018/19 rather than bring the world sugar economy into a deficit phase before mid-2019,” it said.

Published in Dawn, November 18th, 2017