MANILA: Analyst FO Licht revised up its estimate of a global sugar deficit to around 8 million tonnes in the crop year to September 2010 from 6 million earlier because of a supply crunch, Managing Director Christoph Berg said on Wednesday. But the market could breathe a sign of relief in the next crop year, with production likely to rebound in many cane growers, Berg told Reuters on the sidelines of a sugar conference in the Philippine capital. Worries about a supply deficit, falling output in main consumers, particularly India, as well as a wall of investment money have driven raw sugar futures in New York to their strongest in nearly 30 years and London whites to to a lifetime high. “At the moment, it seems as if the deficit will be in the area of around 8 milion tonnes for 2009/10, and that's mostly because of reduction on the supply side,” said Berg. Supply problems in India, Pakistan, Thailand and Indonesia were factors supporting the revision of the global deficit in the current year, but physical buying was limited at current high prices, he added. Front-month New York raw sugar futures SBc1 rallied to a 29-year peak of 30.40 cents/lb on Monday on fund buying driven by the prospects of strong buying from India, Pakistan and Indonesia following a drop in their domestic output. Thailand, the world's second-largest exporter after Brazil, has revised down its estimate of the 2009/10 output to 7.25 million tonnes because of a drop in the cane crop and lower sugar content in the cane. “Indonesia and Pakistan, to some extent, they need the sugar now. This makes the price spike. Apart from these emergency purchases, there's no physical demand at these prices,” said Berg. “India is not buying. They wait for the price to ease. They can afford it. They will need more sugar before the new crop starts but they don't have to buy right now,” he added. India, the world's largest consumer, has asked sugar millers to sell non-levy sugar quota for February on a weekly basis in an attempt to curb spiralling prices of the commodity. The price of sugar has doubled in India in the past one year as the country's output fell far short of consumption, making way to large scale imports, which were estimated as high as 8 million tonnes in the current year, dealers said. Berg expected New York futures to stay above 30 cents in February-March before easing from April when the new crop from Brazil entered the market, while production increases in other countries could eventually lead to a smaller deficit in the 2010/11 season. “I would certainly expect that prices could settle above 30 cents. Whether they'd go up to 35 or 40 cents, I think this is only speculative froth if it happens and it will die down from April,” he said. “We will have production rebound in many countries. At the moment, we consider world sugar production in 2010/11 would have to rise by about 11 million tonnes in order to create a balanced market,” said Berg, without giving other details. Paris-based trade house Sucres et Denrees (Sucden) said on Tuesday a recovery in sugar production in India combined with a bumper crop in Brazil should alleviate the current supply tension in the second half of 2010. reuters