October NY world sugar #11 (SBV24) on Tuesday closed up +0.38 (+1.88%), and Aug London ICE white sugar #5 (SWQ24) closed down -1.60 (-0.27%).
Sugar prices Tuesday settled mixed, with NY sugar climbing to a 2-1/2 month high. Below-normal rainfall in Brazil has sparked short-covering in NY sugar Tuesday due to concerns that dry weather will reduce sugarcane yields and curb Brazil's sugar output. London sugar moved lower Tuesday after the European Commission's Agriculture and Rural Development department projected EU 2024/25 sugar production would climb +5% y/y to 16.4 MMT.
Sugar prices also have carryover support from last Friday when India's agricultural agency reported that a fungus crop disease called red rot was spreading through India's Uttar Pradesh state, a key sugar-growing region. Below-normal monsoon rain in India may curb sugar output in India and is bullish for prices after the Indian Meteorological Department reported Monday that India received 147.2 mm of rain during the current monsoon season as of June 30, down -11% from the long-term average of 165.3 mm.
Weakness in the Brazilian real (^USDBRL) is negative for sugar prices as the real Tuesday fell to a new 2-1/2 year low against the dollar. The weaker real encourages export selling by Brazil's sugar producers.
Robust sugar output in Brazil is bearish for prices. Unica reported last Friday that Brazil's sugar production for the 2024/25 crop year through the first half of June was up +14.4% y/y at 10.95 MMT. Also, the percentage of Brazil's 2024/25 sugar cane crop crushed for sugar rose to 48.38% from 47.24% last year.
Sugar prices are also supported by the outlook for India to keep its sugar export restrictions in place after the Indian government recently said there is no proposal to review its sugar export restrictions. India extended restrictions on sugar exports from October 31 until further notice to maintain adequate domestic supplies. India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season to September 30 after allowing exports of a record 11.1 MMT in the previous season. India is the second-largest sugar producer in the world.
In a bullish factor, the Indian Sugar and Bioenergy Manufacturers Association reported on May 13 that India's 2023/24 sugar production from Oct-Apr fell -1.6% y/y to 31.4 MMT as more sugar mills closed for the year and ended their sugarcane crush. As of April 30, 516 Indian sugar mills had closed operations compared with 460 mills that closed at the same time last year.
For the 2023/24 marketing year that just ended, Unica reported on April 19 that Brazilian sugar output rose +25.7% y/y to 42.425 MMT. Meanwhile, Conab, Brazil's crop agency, projected on April 25 that Brazil's 2024/25 sugar production will climb +1.3% y/y to a record 46.292 MMT as 2024/25 sugar acreage in Brazil increases by +4.1% to 8.7 million hectares (21.5 million acres), the most in seven years.
Record heat in Thailand that may damage the country's sugarcane crops is bullish for sugar prices. On May 6, Thailand's Meteorological Department said that more than three dozen of Thailand's 77 provinces posted record-high temperatures in April, with new highs beating records as far back as 1958. Sugar millers in Thailand are reporting the lowest yield from crushed cane this year in at least 13 years. However, Thailand's government on April 22 estimated that Thailand's 2023/24 sugar production from Dec-Apr 17 was 8.77 MMT, above a Feb estimate from the Thai Sugar Millers Corp for sugar production of 7.5 MMT. Thailand is the world's third-largest sugar producer and the second-largest sugar exporter.
In support of sugar prices, the International Sugar Organization (ISO) on June 10 raised its global 2023/24 sugar deficit estimate to -2.95 MMT from a February estimate of -689,000 MT. ISO also raised its global 2023/24 sugar demand estimate to 182.2 MMT from 180.4 MMT, citing upward revisions to India's consumption figures.
The USDA, in its bi-annual report released on May 23, projected that global 2024/25 sugar production would climb +1.4% y/y to a record 186.024 MMT and that global 2024/25 human sugar consumption would increase +0.8% y/y to a record 178.788 MMT. The USDA forecasted that 2024/25 global sugar ending stocks would fall -4.7% y/y to a 13-year low of 38.339 MMT.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
