But it had been "severely affected by declining incomes" and sugar consumption fell by up to 15 per cent in some countries, with Indonesia and South Korea among the hardest hit, he said.

A fall in ocean freight rates because of the economic crisis opened up the opportunity for Brazil and other Western hemisphere sugars to flow into the Asian region.

"Brazilian export destinations now include Singapore, Malaysia, Indonesia, Vietnam, China and South Korea," Males told the conference in Cebu city.

"Brazilian exports to Indonesia, for instance, in the year to April 1999 were 6,87,000 tonnes compared with 95,000 tonnes in the previous year."

Males partlyattributed a recent firming in physical sugar prices in Asia to a recovery in the freight market associated with a recovery in Asia.

He also said Black Sea markets were absorbing Thai and Brazilian sugar and the Philippines was emerging as an importer.

But with Russia out of the market after August because of seasonal tariffs, and the prospect of another record level of Brazilian exports, Brazilian sugar could be shipped to Asia at "values less than replacement costs", Males added.

In May, Brazilian sugar production was 2.57 million tonnes, up more than one million on the same month last year, and exports were 1.07 million tonnes, up from 371,000 tonnes.

"The recent surge in Brazil's sugar production was largely driven by increases in cane production, not just by a large switch from ethanol to sugar," Males said. Sugar cane is also used to make ethanol In Brazil.

Brazil is considering increasing the ethanol blend in fuel to 26 per cent and the government has authorised the trial of a three per centethanol to diesel mix in a metropolitan area. If this is successful, they are likely to extend the mix to other areas.

"Both of these measures would create additional ethanol consumption of more than one billion litres," Males said.

For the coming season, Brazil was expected to have carry-over stocks of both sugar and ethanol and continue to create uncertainty in the world market.Elsewhere, in Thailand for the coming season, cane output is forecast to rise another 20 per cent to 58 to 60 million tonnes, and in Australia's Queensland state, sugar output is expected to be higher than the rain-interrupted harvest of 4.5 million tonnes last year, but less than the record 5.2 million in 1997/98.

Cuban output is expected to surpass its production target this year of 3.6 million tonnes and to rise further next season.

Indian output is expected to reach 16.4 million tonnes this year, but the low world price may discourage exports and lead to a rise in local stocks, which are also swollen by 1.5 million tonnesof unneeded imports.