Sugar rose on strong demand supported by the lower production
Sugar prices rose to 3375 up by 2.10% on strong demand in wholesale markets of Maharashtra. This was supported by the lower production and stock estimates for the current crop year (CY:2022/23), as well as the higher diversion of sugar to ethanol. India’s sugar production for the CY:2022/23 is estimated 6.4% down on year at 33.5MMT due to unseasonal rain that damaged the cane crop in key producing states. The Indian Sugar Mills Association (ISMA) reported that India’s 2022/23 sugar output from Oct-Mar 15 fell -1.1% y/y to 28.2 MMT, while the sugar diversion to ethanol is estimated at 4.5MMT against 3.6MMT last year. The stock at CY2022/23 end is estimated down at 1.0 MM vs 7MMT last year, indicating a tight supply situation in the domestic market.
The global sugar market also remained bullish as the International Sugar Organization (ISO) cut the global sugar surplus estimate to 4.15 MMT from 6.19 MMT, citing lower production in Brazil and Thailand, and higher consumption in China and Indonesia. StoneX Group, cut their 2022/23 global sugar surplus estimate to 2.5 MMT from a Jan forecast of 5 MMT, reflecting the same factors. Moreover, the weather outlook for the next crop year (CY:2023/24) is uncertain as some models predict an El Nino event, which could bring heavy rains to Brazil and drought to India, negatively impacting sugar crop production in both countries. Brazil is the world’s largest sugar producer and exporter, while India is the second-largest producer and the largest consumer of sugar.
