Sugar set for biggest annual drop since 2017 on surplus outlook
Raw sugar prices are set for their steepest annual fall since 2017, dropping about 22% due to strong production in Brazil and a rebound in India. Despite this surplus, uncertainty in Thailand’s output—hit by delayed crushing and labour issues—may trim the global surplus from earlier estimates.
Raw sugar headed for the biggest annual decline in eight years, with the sweetener weighed down by the prospect of ample supplies.
While the most-active contract in New York rose as much as 1.6% on Wednesday, prices have fallen about 22% this year, the biggest drop since 2017. White sugar futures are down 15% in London, the biggest annual slump since 2018.
Strong production in top exporter Brazil and an output rebound in key grower India is expected to see supplies running well above subdued demand. The market may extend raw sugar losses toward the low-14 cent range in the coming days unless disrupted by an unexpected policy shift or adverse weather, said Arnaud Lorioz, founder of brokerage Deepcore.
However, growing uncertainty over the size of Thailand’s output is threatening to erode some of the surplus. Production has lagged last year’s levels following a delayed cane crush, prompting Covrig’s lead analyst Claudiu Covrig to cut the country’s crop estimate by 400,000-450,000 tons.
“Thai sugar output continues to surprise on the downside,” said Covrig, who now sees a smaller global surplus of 3.6 million tons compared with a prior estimate for 4.1 million tons. “Not all mills are operational, while some areas remain affected by the border tensions with Cambodia and not enough workers.”
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Source : The Hindu Business line
