May NY world sugar #11 (SBK23) on Friday closed down -0.07 (-0.34%), and May London white sugar #5 (SWK23) closed down -0.20 (-0.03%).
Sugar prices Friday posted modest losses. An increase in Brazil's sugar output weighed on prices after Unica reported that Brazil's 2022/23 sugar production from Oct through mid-March rose +4.7% y/y to 33.583 MMT.
Weakness in crude prices also undercut sugar after WTI crude (CLK23) fell more than -1% Friday. Weaker crude prices undercut ethanol prices and may prompt the world's sugar mills to divert more cane crushing toward sugar production rather than ethanol, thus boosting sugar supplies.
Sugar has support from Monday when StoneX Group cut their 2022/23 global sugar surplus estimate to 2.5 MMT from a Jan forecast of 5 MMT, citing lower production in India due to excessive rain.
Last month, NY sugar rallied to a 6-1/4 nearest-futures (H23) high on global weather concerns. The U.S. Climate Prediction Center said the La Nina weather pattern, which has affected weather patterns over the last three years, has ended and that an El Nino weather pattern has a 61% chance of developing in the second half of this year. If that El Nino pattern occurs, it could bring heavy rains to Brazil and drought to India, negatively impacting sugar crop production.
Tighter global sugar supplies are bullish for prices. The International Sugar Organization (ISO) on Feb 24 raised its 2021/22 global sugar deficit estimate to -2.25 MMT from a November estimate of -1.67 MMT and cut its 2022/23 global sugar surplus estimate to 4.15 MMT from 6.19 MMT. However, the ISO still projects that global 2022/23 sugar production will climb +4.8% y/y to a record high of 180.4 MMT.
Sugar prices have underlying support from concern about smaller sugar production in India. The Indian Sugar Mills Association (ISMA) on Jan 31 cut its 2022/23 India sugar production estimate to 34 MMT from an Oct estimate of 36.5 MMT and cut its India 2022/23 sugar export estimate to 6.1 MMT from an Oct forecast of 9 MMT. Also, the ISMA said that it sees India's sugar mills diverting 4.5-5.0 MMT of sugar to ethanol production in 2022/23. Last Friday, the ISMA reported that India's 2022/23 sugar output from Oct-Mar 15 fell -1.1% y/y to 28.2 MMT. India is the world's second-largest sugar producer.
Reduced sugar production in Europe is a supportive factor for sugar prices. The European Association of Sugar Manufacturers on Dec 8 forecasted that EU 2022/23 sugar output would fall -7% y/y to 15.5 MMT.
A negative factor for sugar was the report from Datagro last Wednesday that projected that 2023/24 sugar production in Brazil's Center South would climb by +13.1% y/y to 38.3 MMT. Brazil is the world's largest sugar producer.
A bearish factor is the prospect of additional sugar exports from India. Indian Food Minister Singh said last Monday that India could allow another 1 MMT of sugar exports if India's 2022/23 sugar output reaches the government target of 33.6 MMT. India has already allowed 6 MMT of sugar exports.
On the negative side for sugar was the Feb 1 projection from the Thai Sugar Mills Corp that Thailand's 2022/23 sugar production would climb +14% y/y to 11.55 MMT. Likewise, Thailand's 2022/23 sugar exports are projected to increase +17% y/y to 9.05 MMT. Green Pool Commodity Specialists recently said that Thailand's 2023 sugar production reached 6.59 MMT as of Feb 8, up nearly +10% from last season, with sugar content in the cane crop at a record high. Thailand is the world's second-largest sugar exporter.
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.
