White Sugar #5 Futures Market News and Commentary
July NY world sugar #11 (SBN19) on Friday closed down by -0.01 (-0.08), and Aug ICE London white sugar #5 (SWQ19) closed down by -1.70 (-0.50%). Sugar prices moved lower Friday on the outlook for robust sugar yields in India, the world' second-largest sugar producer, after India's Meteorological Department forecast beneficial rains over the next week for the Maharashtra, Tamil Nadu, and Karnataka provinces, India top sugar producing provinces. India's Agriculture Ministry on Monday forecast India's 2018/19 sugarcane output will climb +5.1% y/y to a record 400.47 MMT. Losses in sugar were limited Friday on strength in the Brazilian real against which is just below Wednesday's 1-3/4 month high against the dollar. A stronger real discourages export selling by Brazil's sugar producers. Sugar prices rallied to 5-week highs Wednesday on signs of smaller supplies after Brazil's Trade Ministry on Tuesday reported that Brazil May sugar exports fell -15% y/y to 1.781 MMT. Robust global sugar output is negative for sugar prices and pushed July NY sugar down to a 7-3/4 month nearest-futures low last Monday. Conab projects that Brazil 2019/20 sugar production will climb by +17.4% y/y to 34.1 MMT and that Brazil's sugar mills will increase their percentage of cane crushing to produce sugar to 39.1% from 34.9% in 2018/19. In addition, the USDA last Thursday estimated that global 2019/20 sugar production will climb +1% y/y to 180.7 MMT and that global sugar consumption will climb by +1.4% y/y to 176.4 MMT. That will reduce global 2019/20 sugar ending stocks by -6.0% y/y to 47.8 MMT. Big Picture Sugar Market Factors: Bullish factors for sugar include (1) lower global production after Conab, Brazil's national crop agency, reported that Brazil 2018/19 sugar output in the marketing year ended March 31 fell -17.2% y/y to an 11-year low of 31.4 MMT, and (2) increased demand from Indonesia, the world's largest sugar importer, after Indonesia's Sugar Refiners Association said refiners may import 3.2 MMT of raw sugar in 2019, up +5.3% y/y. Bearish factors include (1) Conab's forecast for Brazil 2019/20 sugar production to climb by +17.4% y/y to 34.1 MMT and that Brazil's sugar mills will increase their percentage of cane crushing to produce sugar to 39.1% from 34.9% in 2018/19, (2) the USDA's projection for global 2019/20 sugar production to climb +1% y/y to 180.7 MMT, (3) the forecast from India's Agriculture Ministry for India's 2018/19 sugarcane output to climb +5.1% y/y to a record 400.47 MMT, and (4) ISO's forecast that global 2018/19 sugar production rose +0.6% y/y to a record 185.2 MMT and that there was a 2018/19 sugar surplus of 2.2 MMT (vs 2017/18's 7.3 MMT).