Sugar #11 Futures Market News and Commentary
Mar NY world sugar #11 (SBH20) on Wednesday closed down -0.24 (-1.91%), and Dec ICE London white sugar #5 (SWZ19) closed down -5.90 (-1.70%). Sugar prices fell back Wednesday after the Brazilian real fell to a 3-week low against the dollar. A weak real encourages export selling by Brazil's sugar producers. Last Wednesday's sugarcane crushing data from Brazil's Center-South, the country's biggest sugar-producing region, was supportive for sugar prices 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.