By Nigel Hunt
LONDON - Raw sugar futures look set to end this year near current levels but post an annual loss as the COVID-19 pandemic buoys supply and dents demand, a Reuters poll of 11 traders and analysts showed on Friday.
Prices were seen ending 2020 at 12 cents per lb, down 1% from Thursday's close and 11% below levels at the end of 2019, according to the median forecast.
The poll consensus was for a global surplus of 3.5 million tonnes for the 2020/21 season.
The outlook has been transformed since the last Reuters poll, issued on Jan. 31, when prices had been expected to climb to 15 cents a lb by the end of the year, boosted by a then forecast deficit of 1.15 million tonnes for the 2020/21 season.
The shift has been driven by the global COVID-19 pandemic which has curbed demand while also increasing production in Centre-South Brazil.
"The impact of COVID-19 is not fully understood but the negative impact (on sugar consumption) seen in India and China is very unlikely not to have been replicated across the globe," said analyst John Stansfield of Group Sopex.
"Going forward the potential global recession will hit sugar demand," he added.
In Centre-South Brazil the cane crop can be used to make either sugar or biofuel ethanol. Weak demand for motor fuels during the pandemic has prompted mills to shift towards using more cane to produce sugar.
The poll forecast that 47% of the cane would be used to produce sugar in the 2020/21 season, up from a forecast 36.5% in the previous poll.
Sugar production in Centre-South Brazil was seen at 36.8 million tonnes, up from 29.4 million expected in January.
The median forecast for 2020/21 production in India, the world's top consumer, was 31.8 million tonnes, up slightly from the 31.1 million expected in January.
Prices for white sugar were seen ending 2020 at $340 per tonne, down 8% from Thursday's close and 5% below levels at the end of 2019.
(Reporting by Nigel Hunt; editing by Jason Neely)