The world sugar deficit for the year ending Sept. 30 may be ``at the low end of estimates'' at 1 million tons, said Christoph Berg, a managing director of research company F.O. Licht.

 

``That's taking into account the world economic outlook as a result of the financial crisis and how it affects consumption, particularly of Asian markets,'' he said in a phone interview from Bangkok today. ``It's the low end of estimates when others are saying the deficit could be 3-4 million tons.''

 

Sugar is the second-best performer in the Standard & Poor's GSCI index of 24 raw materials this year, gaining 8 percent on speculation demand will exceed supply on lower production in India. Wheat has plunged 37 percent and nickel 59 percent. Sugar cane can be converted into ethanol as an alternative fuel.

 

The sweetener traded at 11.65 cents a pound today in New York compared with $51.74 a barrel for crude oil.

 

``If crude oil stays at current levels for the next 12, 18 or even 24 months, ethanol demand will be affected,'' he said. ``But there are market mandates to fill independent of crude oil prices which means ethanol has to be used.''

 

Crude oil prices are unlikely to remain low for long because of the measures taken by governments worldwide to stabilize the banking system and stimulate the economy, he said, adding that the impact will be felt in the second half of 2009.

 

Crude oil may recover to $100 a barrel by then or by early 2010, he said. Berg is in Bangkok to attend a conference.

 

The ethanol surplus in the U.S., European Union and Brazil will widen 50 percent to 1.8 billion liters (476 million gallons) next year as growth in production outpaces demand, Berg said in Paris Nov. 4.