The International Sugar Organization (ISO) warned that there was little hope for higher sugar prices as it lifted its estimate for the world output surplus in 2012-13 to a record high, and also discarded ideas of a more balanced market next season. The ISO - which uses October-to-September crop years, rather than the April-to-March year which fits better with the Brazilian cycle and is employed by some other commentators - raised for a third time its forecast for the global sugar production surplus in 2012-13, this time to a record high of 9.98 million (m) tonnes.

The increase, from 8.63m tonnes forecast in February, reflected in the main higher production hopes in Brazil, Mexico and, in particular, Thailand, for which the output estimates were upgraded by 825,000 tonnes. World output growth of 4.3% outpaced world demand seen growing by a healthy 2.2%. The organization said that the prospect of an all-time high in the global production surplus leaves little hope for higher prices, which in New York on Wednesday remained within an ace of 34-month lows.

Even more alarming to producers is the trade surplus, the ISO added, noting that while the availability of sugar for export was on track to increase by more than 1.6m tonnes in 2012-13, import demand would fall for a third consecutive season. Output in major importing nations such as India and Russia has been relatively strong, although the ISO did cut its estimate for output in China, whose imports were now seen hitting 3.0m tonnes, 500,000 tonnes higher than previously thought.

The revised estimates see sugar's world stocks-to-use estimate, a key pricing metric, rising to 40.5% from its low of 35.6% two years before, reflecting a tightness which drove raw sugar prices to more than twice their current levels.

The ISO said that it might take until 2014-15 cycle to finally bring a balance between world production and consumption, assuming an average annual growth in global sugar demand at the level of 3.5m tonnes but no considerable increases in the production level.

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