A turn-around in the global sugar market is forecasted following a three years of declining stocks, according to analysts.

During the 2011/12 cycle sugar production is expected to exceed consumption and the surplus could potentially create more of a buyers market for food manufacturers. The sharp rise in global production is expected as producers respond to high sugar prices. Meanwhile sugar consumption is expected to grow by 2% in the 2012 cycle following three years’ average annual growth of 1.1%.

Sugar Broker Czarnikow said global sugar levels are set to rise by 14.2m mtrv (metric tonne raw value) during the 2011/12 season, with an estimated production surplus of 10.3m mtrv. This compares to a deficit of 0.5m mtrv for 2010/11. It also estimates that EU sugar production will increase by nearly 2m mtrv to around 17.4m mtrv for 2011/12. Peter de Klerk, Czarnikow senior analyst, told : “We have had high prices as recently as February of this year and consequently the global producers, particularly the beet producers around the world, have turned up their production.”  He said high prices were a trigger for this, as well as three years of declining stocks and consequently dramatic domestic price rises. However, de Klerk, added: “Although the size of our projected surplus gives confidence that stocks will be rebuilt, with consumption growth now projected to return to around 2% in line with global population growth, the current surplus only represents three years of consumption growth before fresh production capacity or significant productivity improvements will need to be realised for the market to return to stability.”