Sugar prices to rise as global market swings into deficit

World sugar prices are forecast to rise this year with the market swinging into deficit in the 2019/20 season, a Reuters survey of 10 analysts and traders showed on Monday.

Raw sugar prices were expected to end the year at 14.60 cents per lb, up 15 percent from Friday's close, according to the median forecast of responses.

The world sugar balance was seen switching to a deficit of 1.90 million tonnes in 2019/20 compared with a surplus of 2.55 million in 2018/19.

The shift was partly driven by a forecast fall in India's production to 29.50 million tonnes in 2019/20 from 32.00 million in 2018/19, according to the poll.

Respondents said potential exports from India, where stocks have been climbing, may limit the scope for a rise in prices while the relative profitability of sugar and ethanol production in Brazil would also have a major influence on prices.

Depressed sugar prices have led Brazilian companies to increase their capacity to produce ethanol, with many mills able to switch between using cane to produce either sugar or biofuel ethanol depending on which is more profitable. The size of any deficit will also help determine the extent of any rebound with weather likely to play a key role.