Global Sugar Supply Deficit Widens as India Increases Ethanol Production

The world's sugar supply balance is anticipated to worsen in the 2021/22 season, which began in October, due to increased usage of sugarcane for ethanol production in India and reduced production in Brazil. 

The season will see demand surpassing production for the third year in a row which predicts a supply shortage of 1.8 million tonnes, 1 million tonnes more than it anticipated in October. 

Global output was estimated to be 186.6 million tonnes, with demand estimated to be 188.4 million. According to the broker, demand has lately improved since ocean freight prices have fallen. It experienced increased buying from Asian countries and refining hubs. 

India is expected to produce a record amount of sugarcane due to favorable weather, but the country's ethanol blending program will take the equivalent of 3 million tonnes of sugar from the market resulting in sugar production that is roughly the same as the previous crop, or around 31 million tonnes. 

Production in Brazil's center-south area is expected to be 31.3 million tonnes, a 12% decrease from the previous year. Brazil's new sugar season, which begins in April, would see a 6% increase in overall sugarcane volumes to 565.3 million tonnes. 

Sugar output in the European Union including the United Kingdom is expected to jump nearly 12% to 17.2 million tonnes in 2021/22 (Oct-Sept), as a wetter summer in Europe increased beet yields. 

Earlier, Nitin Gadkari, Union Minister also stated that India will raise production of alternative fuel ethanol as a result of rising petrol and diesel costs.

Gadkari stated in a virtual address at a conference organised by BRICS Network University that automotive manufacturers are building flex-fuel engines in Brazil, Canada, and the United States, giving customers the option of using 100% petrol or 100% bio-ethanol.