01 February 2023, New Delhi: March NY world sugar #11 (SBH23) on Monday closed up +0.25 (+1.19%), and March London white sugar #5 (SWH23) closed up +6.30 (+1.12%).
Sugar prices Monday extended their week-long rally, with NY sugar soaring to a nearly 6-year high and London sugar climbing to a 1-month high. Sugar prices are rising on speculation that smaller sugar output in India will dissuade the government from allowing additional sugar exports. India’s National Federation of Cooperative Sugar Factories projects that India’s 2022/23 sugar production will fall -4.5% y/y to 34.3 MMT. India’s Food Secretary Chopra said earlier this month that India would assess domestic demand before deciding whether to allow more sugar exports next month. India is the world’s second-largest sugar exporter.
Sugar prices also have support from last Tuesday when Brazil’s state-owned oil company Petrobras raised gasoline prices by more than +7% to distributors. Strength in gasoline is supportive of ethanol prices, and higher ethanol prices may prompt Brazil’s sugar mills to boost ethanol production at the expense of sugar.
Earlier this month, NY sugar posted a 2-1/2 month low on an improved sugar supply outlook. Unica on Jan 11 reported that Brazil’s 2022/23 sugar production through December rose +4.4% y/y to 33.462 MMT. Brazil is the biggest sugar producer in the world. Also, the India Sugar Mills Association (ISMA) reported last Tuesday that India’s 2022/23 sugar production from Oct-Jan 15 rose +4% y/y to 15.7 MMT.
Higher sugar output in India is bearish for prices. On Oct 24, the ISMA 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. 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 bullish factor, StoneX Financial said Dec 14 that due to a delay in Thailand’s sugar harvest, projections for Thai sugar exports of 1 MMT to 2 MMT this quarter “will not materialize.” Also, India’s Sugar Mills Association (ISMA) said that it sees India’s sugar mills diverting 4.5 MMT to 5.0 MMT of sugar to ethanol production in 2022/23.
Reduced sugar production in Europe is another supportive factor for prices, as that may force European sugar and food manufacturers to import sugar, leading to tighter global supplies. 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.
In a bearish factor, the International Sugar Organization (ISO) on Nov 22 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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