NEW YORK, Sept 9 (Reuters) - Benchmark raw sugar prices

in New York are expected to stay firm and possibly go

higher than current levels due to a tight global balance of the

sweetener, Bank of America Global Research said in a note on

Monday.

Analysts at the bank said cane crushing in Brazil, the

world's largest sugar producer and exporter, has been below

expectations "given dry weather and the recent wildfires in Sao

Paulo state."

"There is also a risk to cane crushing volumes in Brazil in

2025/26 given a potentially drier inter-harvest period and yield

impacts from the wildfires, especially in (cane) renewal areas,"

the bank said, adding that it sees most projections for the

Brazilian crop as "overestimated".

BofA projects the global sugar balance at a small surplus of

650,000 metric tons, leading to a stocks-to-use ratio of 54.1%.

It said those fundamentals should drive prices to around 21-22

cents per pound.

Sugar prices on ICE closed at 18.83 cents per pound on

Monday, a two-week low.

The bank said that if India goes ahead with plans to divert

3 or 4 million tons of sugar to ethanol production, the global

supply balance would shift to a deficit of around 3 million

tons.

BofA also expects ethanol prices to rise in the Brazilian

market with the smaller cane crop. With those fundamentals, the

bank has a buy recommendation for sugar and ethanol companies

Adecoagro ( AGRO ), Raizen and Sao Martinho

.