Sugar #11 Mar '20 (SBH20)
Sugar #11 Futures Market News and Commentary
Mar NY world sugar #11 (SBH20) on Friday closed unchanged, and Dec ICE London white sugar #5 (SWZ19) closed up by +0.70 (+0.21%). Sugar prices recovered from early losses Friday as Mar NY sugar rebounded from a 2-1/2 week low and closed unchanged after the Brazilian real erased early losses and strengthened against the dollar. The real rose +0.32% Friday against the dollar, which discourages export selling by Brazil's sugar producers. Another supportive factor for sugar was carry-over from Wednesday's sugarcane crushing data from Brazil's Center-South, the country's biggest sugar-producing region, after Unica reported that 35.1 MMT of total sugarcane was crushed in the second half of Sep, below expectations of 36.2 MMT. Also, Unica reported that total 2019/20 Brazil Center-South sugar output through Sep fell -2.4% y/y to 21.8 MMT. Unica projects that increased ethanol output in Brazil will cut Brazil 2019/20 Center-South sugar production by -5.7% y/y to a 14-year low of 25 MMT. Dec London sugar posted a 7-1/4 month nearest-futures high Oct 4 and Mar NY sugar rose to a 1-3/4 month high Oct 2 on the outlook for smaller future sugar supplies. Green Pool Commodity Specialists Oct 2y raised their 2019/20 global sugar deficit estimate to 5.3 MMT from an Aug estimate of -3.8 MMT. JPMorgan Sep 30 raised its 2019/20 global sugar deficit to -6.4 MMT, more than double a June projection for a -3.0 MMT global sugar deficit. JPMorgan also said sugar "is transitioning into a longer-term deficit phase" and projects that a global 2020/21 global sugar deficit will be a minimum -7.0 MMT. Dry conditions in Thailand, the world's fourth-largest sugar producer, are supportive for sugar prices after Maxar said Oct 1 that two-thirds of Thailand's sugar-growing regions received only 40% of average rain in the past month, which has stunted cane growth. Big Picture Sugar Market Factors: World sugar production in 2019/20 (Apr/Mar) will fall -2.3% y/y to 172 MMT, after the +0.6% y/y rise to a record 185.2 MMT in 2018/19 (ISO). The world sugar balance in 2019/20 will switch to a -4.8 MMT deficit after the +1.7 MMT surplus seen in 2018/19 (ISO). Sugar production by Brazil, the world's largest sugar producer, in 2019/20 will climb by +17.4% y/y to 34.1 MMT, after production in 2018/19 (Apr/Mar) fell -17.2% y/y to an 11-year low of 31.4 MMT (Conab). Sugar production by India, the world's second largest sugar producer, in 2019/20 will fall -15% y/y to a 3-year low of 28 MT due to drought and a delayed monsoon season (India's National Federation of Cooperative Sugar Factories Ltd).
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