Asia faces a long-term sugar deficit as economic growth boosts demand with supply trailing usage by about 3 million metric tons this year, according to Tom McNeill, who’s worked in the industry for more than 25 years.

Growth in supply can’t keep pace with consumption, according to McNeill, director at Green Pool Commodity Specialists. China, the second-largest economy, and Indonesia are set to remain as importers, said McNeill, formerly head of analysis at Lausanne, Switzerland-based broker Kingsman SA.

The regional shortage may absorb some excess supply in the global market as world output is set to top demand for a second season in 2012-2013. The surplus may be 7.5 million tons this year and 4.5 million tons next year, said McNeill, matching a forecast for successive surpluses by Olam International Ltd. (OLAM)

“Asia will remain a deficit region as demand grows,” he said today after addressing a conference in Bangkok organized by F.O. Licht, the Ratzeburg, Germany-based researcher. “I can’t really see how Asia can meet demand growth on a long-term basis because of strong demand in China and India.”

Raw sugar on ICE Futures U.S. lost 27 percent in 2011, the biggest drop in a decade, as traders sold the commodity on anticipation of the second global surplus. The May-delivery contract traded at 25.03 cents a pound at 4:44 p.m. in Bangkok, declining for a second day.

Wilmar’s Expansion

Demand in Asian markets, including China and India, tops annual supply by 30 percent, according to a 2010 presentation from Singapore-based Wilmar International Ltd. (WIL) after it acquired Sucrogen Ltd., Australia’s biggest refiner. Wilmar also bought Australia’s Proserpine Sugar Mill last December, and has said it plans to set up sugar plantations in Indonesia’s Papua province.

While output in China will increase, the expansion won’t be enough to meet growth in consumption because of bad weather, low yields and competition from other crops for land, McNeill said. China may import 3.5 million tons this season, he said.

China’s production may total 11.3 million tons this year, and the nation may face difficulty expanding output beyond 12 million tons, McNeill said. Imports may total 2.2 million tons this year, according to the U.S. Department of Agriculture.

Zhao Lihua, an official at China’s National Development and Reform Commission, said output may miss a previous estimate of 12 million tons after drought in Yunnan province and rains in Guangxi region, according to a report on industry website Gsmn.cn earlier this month.

Indian Outlook

Sugar demand in India, the world’s second-largest producer, is growing faster than output, according to Narendra Murkumbi, president of the Indian Sugar Mills Association and director atShree Renuka Sugars Ltd. (SHRS) Consumption may outstrip output by 4.9 million tons by 2020, Murkumbi said at a conference in November.

Thailand, the second-largest exporter after Brazil, may expand output to 12 million to 14 million tons in three to five years from 10.5 million tons estimated for the current season, said McNeill. Green Pool, based in Kangaroo Point, Queensland, undertakes research and analysis on sugar and biofuels.

Global sugar supply may top demand by as much as 7 million tons in 2012-2013 as Brazil’s crop recovers, John Stansfield, senior analyst at Olam’s U.K. unit, said yesterday. F.O. Licht has also forecast another worldwide surplus next season.

To contact the reporter on this story: Supunnabul Suwannakij in Bangkok atssuwannakij(at)bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4(at)bloomberg.net