London, March 11 - A global sugar deficit of 3.3 million tonnes is forecast in 2009/10 (October/September), a smaller shortfall than the previous season's anticipated 7.4 million tonne deficit, Macquarie said in a report on Tuesday.
The investment bank said production in 2009/10 was seen climbing to 160.1 million tonnes from 153.3 million and consumption rising to 163.3 million from 160.6 million.
"The sugar market is heading towards its first global deficit in three years in 2008/09...Under normal conditions this would almost certainly make us sharply raise our price expectations," commodity strategist Kona Haque said.
"However, such is the economic climate and uncertainty surrounding commodity markets that we prefer to adopt a more cautious optimism for the short term," she added.
Haque said she expected sugar prices to show strong resilience in 2009 rather than embarking on a sharp rally.
"Moves on the upside may be limited as the market absorbs the previous surplus and as Brazil prepares to increase sugar output," Haque said.
"Yet by the end of 2009, assuming world consumption holds steady, sugar prices could begin to rally as existing stocks are depleted."