ORLANDO, FLA. – Despite increased use of cane for ethanol in Brazil, increased sugar production in other countries will keep global sugar supplies ample and prices under pressure, said Tom McNeill, managing director of Australian-based Green Pool Commodity Specialists.

Two years of global deficit sugar supplies that were not as large as expected will be followed by two years of surplus, Mr. McNeill said at the International Sweetener Colloquium in Orlando Feb. 13. He forecast a 5.5- million-tonne surplus in 2018-19. The surplus will be driven by production gains in China, Thailand, the European Union and especially India, he said, which will more than offset a sharp decline Brazil.

There currently was a 4c to 5c a lb advantage to produce ethanol over sugar in Brazil, Mr. McNeill said, noting that overall milling capacity has declined in the world’s largest sugar producer after low prices sugar in recent years. He forecast Brazil’s 2018-19 sugar production at 32 million tonnes, down 4 million tonnes from 2017-18, which ends March 31. He expects 42.5% of Brazil’s cane to be used for sugar and 57.5% for ethanol, depending on crude oil prices. Brazil recently passed legislation to increase the amount of ethanol used for fuel.

Raw sugar prices from 11c to 13.5c a lb in 2018 would encourage reduced sugar production, he said, noting that there was “pain ahead for producers.” He estimated sugar production costs from 14c to 16c a lb in many countries.

Mr. McNeill forecast global sugar consumption to increase 1.4% in 2017-18, up from an increase of 0.3% in 2016-17. A combination of sugar taxes, health concerns and food manufacturers’ reformulations to use less sugar will limit gains in global sugar consumption, he said.