SAO PAULO, Sept 11 (Reuters) - The global sugar surplus could fall by 68 percent in the 2013/14 season from the year-earlier period due to rising global consumption, Datagro commodities consultancy said on Wednesday.
The surplus should shrink to 3.06 million tonnes in the season that officially starts in October from 9.5 million tonnes previously, as world top producer Brazil's output of the sweetener holds steady, São Paulo-based Datagro said at an event. The upcoming season ends in September 2014.
"Global demand continues to grow, at 3-4 million tonnes per year and if the grand motor of the global surplus, which is Brazil, maintains its production the surplus will begin to shrink," Plínio Nastari, Datagro's president, said at a news conference.
The International Sugar Organization expects the global surplus to slide to 4.5 million tonnes in 2013/14 but says that might not help prices of the sweetener, which have been low for years.
Datagro expects 34.18 million tonnes of sugar from Brazil for the 2013/14 crop, nearly stable from the 34.09 million tonnes produced in 2012/13 even though the amount of cane processed is expected to increase by 9 percent.
Brazilian mills are favoring ethanol production over sugar because competitive prices for the biofuel compared with gasoline have increased domestic demand for ethanol.
Datagro, which said it studied sugar supply and demand in 122 countries, said Thailand's output should increase by 400,000 tonnes in 2013/14 while India's should fall between 500,000 and 1 million tonnes from the previous season.
Datagro's Nastari predicted a "slight recovery" in the European Union's sugar output and a fall of between 300,000 and 400,000 tonnes in Mexico.
Sugar prices in New York registered their lowest price in three years in July. If low prices continue, Nastari said there could be a global sugar deficit in two years.
"There needs to be a price signal that causes investment to resume," he said. (Reporting by Gustavo Bonato; Writing by Caroline Stauffer; Editing by David Gregorio)