Sugar Prices Continue to See Downward Pressure from Higher Indian Sugarcane Production Forecast
May NY world sugar #11 (SBK24) is down -0.09 (-0.41%), and May London ICE white sugar #5 (SWK24) is up +1.80 (+0.29%).
NY sugar prices today continue to see downward pressure after the Indian Sugar and Bioenergy Manufacturers Association on Wednesday raised its forecast for India’s sugarcane production in the 2023-24 marketing year (that began on Oct 1) by +2.9% to 34 MMT from January’s forecast of 33.05 MMT. Higher sugarcane production likely means higher refined sugar production, depending on how much of that sugarcane is converted into ethanol.
Higher sugar production in Brazil is bearish for sugar prices. Unica reported on Tuesday that Brazil’s Center-South sugar output in the second half of February was 16,000 MT, up from zero in the year-earlier period. Also, sugar output so far in the 2023-24 marketing year rose +26% y/y to 42.181 MMT. Unica also said it expects 28 mills in the Center-South region to resume production in the first half of March after their off-season pause, which would be more than the year-earlier figure of 10 reopening mills in that period.
Reduced sugar production in India is a bullish factor. The Indian Sugar Mills Association (ISMA) reported last Monday that India’s 2023/24 sugar output from Oct through Feb fell -1.4% y/y to 25.5 MMT. India’s Weather Department said this year’s monsoon rain (Jun-Sep) was 6% below average, the poorest monsoon rainfall in 5 years. In October, India extended restrictions on sugar exports from Oct 31 until further notice in an attempt to maintain adequate domestic supplies. India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season to Sep 30 after allowing exports of a record 11.1 MMT in the previous season. India is the second-largest sugar producer in the world.
Sugar prices are also seeing support from signs that India’s ban on sugar exports will be maintained and global supplies will remain tight after India recently announced a 50% export tax on molasses from sugar refining. That reduces the likelihood that India will lift its sugar export curbs in the foreseeable future.
Reduced Thai sugar production is bullish for sugar prices after the Thai Sugar Millers Corp projected on Feb 6 that Thailand’s 2023/24 sugar production would fall by -32% y/y to a 17-year low of 7.5 MMT due to a severe drought. Rainfall in Thailand has been below the same period last year, and the current El Nino weather system could continue to depress rainfall in Thailand. Sugar millers in Thailand are reporting the lowest yield from crushed cane this year in at least 13 years. Thailand is the world’s third-largest sugar producer and the second-largest sugar exporter.
Sugar prices are seeing support from this year’s El Nino weather event. An El Nino weather pattern typically brings heavy rains to Brazil and drought to India, negatively impacting sugar crop production. The last time El Nino brought dryness to sugar crops in Asia was in 2015 and 2016, which caused prices to soar.
The USDA, in its bi-annual report released on Nov 23, projected that global 2023/24 sugar production would climb +4.7% y/y to a record 183.461 MMT and that global 2023/24 human sugar consumption would increase +1.2% y/y to a record 178.431 MMT. The USDA also forecasted that 2023/24 global sugar ending stocks would fall -13.3% y/y to a 13-year low of 33.681 MMT. The International Sugar Organization (ISO) on Feb 28 raised its 2023/24 global sugar deficit estimate to -689,000 MT from a November estimate of -335,000 MT.
Source Link: https://www.nasdaq.com/articles/sugar-prices-continue-to-see-downward-pressure-from-higher-indian-sugarcane-production
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