London, Oct 3 - Consultancy Kingsman revised up on Thursday its 2008/09 global sugar deficit forecast to almost 4.7 million tonnes from its previous forecast for a 3.8 million tonnes deficit.
The deficit forecast was revised higher as supply conditions took a hit after storm damage in Cuba, Louisiana and Texas.
"Updated annual supply and demand figures for 2008/09 show that the forecast deficit has moved out to almost 4.7 million tonnes," managing director Jonathan Kingsman told a private presentation to clients before the London sugar trade dinner.
"Cuba has potentially lost 0.300 million tonnes of sugar from what was looking like a more promising crop next year," he added. "The U.S. has lost a similar quantity due to hurricane damage in Louisiana and Texas."
Kingsman added that wet weather had slowed the harvest in the main cane producing region in the centre-south of Brazil, the world's top sugar producer and exporter, and sugar production was running at below last year's levels.
"We're (now) running at 4 percent less sugar production than last year," Lausanne-based Kingsman said.
Kingsman also said that the global financial crisis was creating problems for Brazilian mills seeking credit to expand.
"Because of credit problems, we don't believe that Brazilian industry will be in a position to increase their crushing capacity by very much," he said.
Kingsman said the 4.7 million tonne deficit forecast might have to be revised higher if Indian production in 2008/09 is revised downwards. India is the world's number 2 sugar producer.
"If we went to a 20 million tonne Indian crop (from a current 22 million tonne estimate), that would mean a 6-7 million tonne (global) deficit," Kingsman said.
As India shifted from being a sugar exporter to an importer, some 2.0 million tonnes will be carried forward from stocks in Brazil, Thailand and Australia.
"Falling freight rates are helping to transfer those producer stocks to destination," Kingsman said.
"The world is losing 4.0 million tonnes of Indian sugar exports," he added. "Indian (domestic) prices are high and imports are happening."
Brazil has booked some 300,000-to-400,000 tonnes of raw sugar sales to India, expected to be delivered in the next two months, a senior executive with Brazilian producer Cosan told Reuters after the presentation.
Commercial director Carlos Murilo de Mello said the deal to sell sugar from the centre-south of Brazil was booked in the last two months as Brazil seized opportunities from India's shift from a sugar exporter to importer.
Kingsman said that despite the global financial meltdown, he expected global sugar consumption growth to hold steady at around 2.5 percent a year.
Kingsman also predicted a 2008 global fuel ethanol deficit of 81 million litres, compared with an earlier forecast for a surplus this year of 175 million litres.
Kingsman has estimated a 2007 global fuel ethanol surplus of 1.77 billion litres.
An increase in production in the U.S. and Brazil, is more than offset by higher consumption, primarily in the U.S. and Brazil and to a lesser degree in Europe this year.