October NY world sugar #11 (SBV24) on Monday closed up +0.56 (+2.92%), and Aug London ICE white sugar #5 (SWQ24) closed up +24.00 (+4.38%).
Sugar prices recovered from early losses on Monday and moved sharply higher. Sugar prices rallied Monday on below-normal monsoon rain in India, the world's second-largest sugar producer. The Indian Meteorological Department reported Monday that India received 287.7 mm of rain during the current monsoon season as of July 15, down -2% from the comparable long-term average of 294.2 mm.
Sugar prices on Monday initially moved lower, with NY sugar posting a 3-week low. Robust sugar output in Brazil, the world's largest sugar producer, is bearish for prices after Unica reported last Thursday that Brazil's sugar production for the 2024/25 crop year through June was up +15.7% y/y at 14.2 MMT. Also, the percentage of Brazil's 2024/25 sugar cane crop crushed for sugar rose to 48.72% from 47.69% last year.
Sugar prices are also under pressure after the Indian Sugar and Bio-energy Manufacturers Association (ISM) on July 3 reported India's 2023/24 sugar reserves at 9.1 MMT and reported a surplus of 3.6 MMT. The group also urged the government to allow increased exports of surplus sugar. India has restricted sugar exports since October 2023 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. Separately, 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.
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.
Conab, Brazil's crop agency, projected on April 25 that Brazil's sugar production for the overall 2024/25 marketing year 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. For the 2023/24 marketing year that just ended, Unica said on April 19 that Brazilian sugar output rose +25.7% y/y to 42.425 MMT.
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.
