Agriculture Industry

Sugar Sharply Higher On The Outlook For A Smaller 2022/23 Global Sugar Surplus

Quick Share

01 March 2023, New Delhi: May NY world sugar #11 (SBK23) on Monday closed up +0.62 (+3.15%), and May London white sugar #5 (SWK23) closed up +9.30 (+1.65%).

Sugar prices Monday rallied sharply on positive carryover from last Friday when the International Sugar Organization (ISO) raised its 2021/22 global sugar deficit estimate to -2.25 MMT from a prior estimate of -1.67 MMT and cut its 2022/23 global sugar surplus estimate to 4.15 MMT from a November estimate of 6.19 MMT.  However, the ISO still projects that global 2022/23 sugar production would climb +4.8% y/y to a record high of 180.4 MMT.  

Sugar prices also have from last Feb 17 when India said it wouldn’t allow additional sugar exports beyond the 6.1 MMT it has already allowed this season.  The government is concerned that a smaller Indian sugar crop could tighten domestic supplies this year, so it decided not to allow additional exports.  However, the Indian Sugar Mills Association (ISMA) reported that India’s 2022/23 sugar output from Oct-Feb 15 rose +2.8% y/y to 22.84 MMT.  

Sugar prices have underlying support from concern about smaller global sugar production.  The Indian Sugar Mills Association (ISMA) on January 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.  In addition, the  ISMA said that it sees India’s sugar mills diverting 4.5-5.0 MMT of sugar to ethanol production in 2022/23.  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.

Strong Brazil sugar output is bearish for prices after Unica reported Monday that Brazil’s 2022/23 sugar production through mid-February rose +4.5% y/y to 33.503 MMT.  Brazil is the world’s largest sugar producer.

A bearish factor 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 Monday 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.  

Also Read: Concern over Wheat production due to the ongoing heatwave

(For Latest Agriculture News & Updates, follow Krishak Jagat on Google News)

Quick Share