London, July 10 - Sugar market conditions are tightening due to disappointing Brazilian yields, the allocation of cane to ethanol biofuel as well as reduced Indian cane area and lower U.S. beet output, consultancy Kingsman SA said.
"The statistical situation for 2008/09 has undoubtedly tightened over the past 1-2 months as low prices and poor yields turned Brazilian cane into ethanol," Lausanne-based Kingsman said in a monthly statistical update.
Brazil is the world's top sugar producer.
"Some unexpected outcomes such as the U.S. beet reduction and possible lower India figures being talked around have added to the tightening, but remember, a lot yet depends on Northern Hemisphere summer rainfall."
Kingsman said heavy rainfall in April/May had reduced the Brazilian crop's potential yields.
"It is likely that other factors are coming into play -- high fertiliser prices, a reduction in care for the crop, and quite possibly the impact of mechanical harvesting which has some history of reducing yields," Kingsman said.
Kingsman also noted that in India, the world's number two sugar grower, farmers had reduced cane acreage, and may have applied less fertiliser and care to the crop, reducing its yield potential.
Kingsman noted that the USDA had cut its estimate of the area sown to sugar beet for the 2008 crop to 1.08 million acres (437,100 hectares), down 15 percent from the 1.27 million acres sown last year.