ISO sees 2010/11 sugar surplus as India output rises.

The International Sugar Organization forecast on Wednesday there would be a global sugar surplus in 2010/11 with a rise in production in India turning the world's top consumer into an exporter.

"After two years of a large statistical deficit, the world sugar economy is facing a season with a production surplus over consumption," the ISO said in a quarterly market outlook.

The ISO, in its first assessment of the world sugar balance for 2010/11, forecast a global surplus of 3.22 million tonnes in 2010/11 (October/September) compared with a deficit of 4.95 million in 2009/10.

Production was seen rising by more than seven percent to 170.38 million tonnes and consumption climbing more slowly by around two percent to 167.15 million.

The bulk of production increase was seen in India.

"To a large extent, the projected increase in the Asian giant's production of nearly seven million tonnes, as against last season, dwarfs the dynamics in other producers," the organisation said.

The ISO forecast that India would have net exports of 945,000 tonnes compared with net imports of 3.3 million tonnes in 2009/10.

Export availability for raw sugar was expected to exceed import demand by nearly 1.9 million tonnes while for white sugar they were practically equal.

"The market may face a physical supply tightness of white sugar," the ISO said.

The ISO said the bearish pressure of the projected global surplus should be mitigated by the low level of stocks.

"Major downward price corrections would be a surprise. On the other hand, a surplus is a surplus....and further price advances are likely to be capped."

Source : moneycontrol.com