July 27 (Bloomberg) -- Global sugar inventories may take two years to be rebuilt after demand outpaced supplies in the past two seasons, the International Sugar Organization said.
Smaller crops in the 2008-09 and 2009-10 seasons left a deficit of 15 million metric tons, senior economist Sergey Gudoshnikov estimated. Production will outpace consumption by just 779,000 tons in the season started in October, according to the London-based ISO. The surplus for 2011-12 forecast at more than 3 million tons may be reduced on lower output in Brazil, it said July 14.
“For the time being, I can’t see where the big crop increases will come from to make up for 15 million tons,” Gudoshnikov said in an interview in London yesterday. “Even with the best scenario possible for Brazil’s production this year, it won’t be enough to rebuild stocks.”
Sugar output in the Center South, Brazil’s main producing region, will fall for the first time in six years to 32.4 million tons in the 2011-12 season, industry group Unica estimates. While the 2011-12 crop year starts in October for most countries, harvesting in Brazil is already under way. The nation is the world’s largest producer of the sweetener.
Sugar prices are likely to stay volatile in the new season as low inventories will be unable to provide a cushion in case of weather effects or other supply-related shocks, Gudoshnikov said. “Stocks are affecting the stability of price, rather than dictating price level,” he added.
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