Economy

The increase in ethanol production in India may reduce global sugar supply

According to broker StoneX, the world’s sugar supply balance is anticipated to worsen in the 2021/22 season, which started in October, due to higher sugarcane use for ethanol production in India and lower production in Brazil.

According to StoneX, demand would surpass supply for the third year in a row, with a supply imbalance of 1.8 million tonnes, up 1 million tonnes from its October prediction.

Demand is predicted to reach 188.4 million tonnes, while global output is expected to reach 186.6 million tonnes. According to the broker, demand has recently improved since ocean freight rates have reduced. Purchases from Asian countries and refineries were higher.

According to StoneX, India is expected to produce a record amount of sugarcane due to favourable weather, but the country’s ethanol blending programme will take the equivalent of 3 million tonnes of sugar off the market, resulting in sugar production of around 31 million tonnes, roughly the same as the previous crop.

Brazil’s center-south area is predicted to produce 31.3 million tonnes, down 12% from the previous year.

The 2019 sugar season in Brazil, which begins in April, is expected to witness a 6% increase in overall sugarcane volumes to 565.3 million tonnes, according to StoneX.

Sugar output in the European Union, which includes the United Kingdom, is predicted to increase by over 12% to 17.2 million tonnes in 2021/22 (October-September), owing to a wetter summer in Europe, which enhanced beet yields.

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