(Bloomberg) -- The world's largest sugar trader expects a sixth straight year of deficits in the coming season as a poor outlook for India's crops is set to drive down global stockpiles of the sweetener.
“The world will be as close to running out of sugar as it can be,” said Mauro Virgino, trading intelligence lead at Alvean, a trading house controlled by Brazilian producer Copersucar SA.
Extreme weather in India will probably keep the world's No. 2 supplier from shipping any sugar overseas for the season starting in October, according to Virgino. Below-average monsoon rains will also probably keep Indian farmers from planting sugar cane, harming future production, he said in an interview.
Alvean also expects difficulties in Thailand, another key exporter, as higher profits from growing cassava continue to drive farmers away from sugar cane.
Global markets will face a 5.4 million metric ton deficit of the sweetener in the coming season, Virgino said. That's higher than the 1 million ton shortfall of the current season and will mark the sixth year of shortages, according to company estimates.
The tightness in supplies is set to shrink inventories even further, according to Virgino, bringing a measure of stockpiles-to-consumption down to levels similar to 2011. At that time, raw sugar futures surged to a three-decade high.
Threats of a global shortage loom even as top supplier Brazil continues boosting output, with the current season's production expected to approach 40 million tons — near a record — and forecasts of a similar output next year.
“Brazil is doing a good job supplying the global market, but the country alone cannot do the trick,” Virgino said.
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