NAPA, CALIF. — A drawdown in global sugar stocks and an expected global sugar deficit in 2023-24 has the world market in a bullish phase, an analyst said Aug. 7 at the International Sweetener Symposium.

“The (world) market is clearly going through a bullish cycle, though the ‘sugar story’ is still developing,” Toby Cohen, vice president of market analysis at ASR Group, London, told attendees at the International Sweetener Symposium.

He said the world market was “reflecting stress” with “very high” sugar prices currently.

“The market has been inverted since 2020,” Mr. Cohen said. “The spreads tell us that the world sugar market has been drawing down stocks.”

India, the world’s second largest sugar producer and largest sugar consumer, is “really key,” he said. Sugar exports were subsidized by the Indian government in 2018-19, 2019-20 and 2020-21 to reduce burdensome stocks, but strong world prices supported unsubsidized exports of 11.3 million tonnes of sugar in 2021-22 and 6.5 million tonnes in 2022-23. Mr. Cohen expects India may export only around 3 million tonnes of sugar in 2023-24. Meanwhile, sugar stocks in India have declined sharply since 2018-19.

“India sugar policy has successfully reduced stocks, leading to improved mill finances and grower payments,” Mr. Cohen said. “However, the stock position is now becoming sensitive given tight supply in other food commodities.” He noted India’s recent ban on exports of wheat and certain varieties of rice.

Meanwhile, Brazil, the world’s largest sugar producer and exporter, is “having a great year,” Mr. Cohen said. Cane crush in the current 2023-24 marketing year (began April 1) may reach or surpass the record level of 2016-17, and mills were maximizing sugar over ethanol since the price of sugar is at about a 50% premium to the price of ethanol.

Mr. Cohen concluded by noting that the US and Mexican sugar markets were becoming interconnected.