22 November 2022, New Delhi: March NY world sugar #11 (SBH23) on Monday closed down 0.19 (-0.95%), and March London white sugar #5 (SWH23) closed down -7.40 (-1.36%).
Sugar prices on Monday were pressured after Czarnikow forecasted that Brazil’s Center-South mills would produce 34.7 million metric tons of sugar in 2023-24 (Apr/Mar), up +7% y/y and the highest in three years.
Sugar prices also saw pressure Monday after the Organization of Cane Producers Association in Brazil forecasted Brazil’s sugar output in 2022/23 at 36.9 million metric tons due to favorable weather and that production would reach 37.2 million metric tons in 2023/24.
Sugar prices on Monday were also pressured by general worries about global commodity demand and the -1% sell-off in Dec WTI crude oil prices. Lower crude prices undercut ethanol prices and may prompt Brazil’s sugar mills to divert more cane crushing toward sugar production rather than ethanol, thus boosting sugar supplies.
Sugar prices continue to have support from concern about Asian sugar supplies after recent news that some Indian sugar mills reneged on contracts, forcing buyers to cover positions in the cash market. In addition, the Indian Sugar Mills Association said last week that India’s sugar production from Oct 1 to Nov 15 fell by -4.3% y/y, suggesting disruptions in production. Sugar prices last week also saw support from reports that rain in Thailand has delayed the harvest by up to two weeks.
Unica recently reported that Brazil’s Center-South sugar output in the 2022/23 marketing year through October was down -3.1% y/y at 30.281 MMT.
Higher sugar output in India is bearish for prices. On Oct 24, the Indian Sugar Mills Association forecasted that India’s 2022/23 sugar production (Oct 1-Sep 30) would climb +2% y/y to 36.5 MMT as Indian farmers boosted their planted cane acreage by +5.4% y/y to 5.6 mln hectares. In 2021/22, India’s sugar production rose +2.9% y/y to 35.8 MMT. India is the world’s second-largest sugar producer. Also, robust sugar exports from India are bearish for prices after India 2021/22 sugar exports jumped +57% y/y to a record 11 MMT.
In a bearish factor, the International Sugar Organization (ISO) last Tuesday projected that global 2022/23 sugar production would climb +5.5% y/y to a record high of 182.1 MMT. Also, ISO projected that the 2022/23 global sugar market would be in a surplus of +6.2 MMT.
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