White Sugar #5 Futures Market News and Commentary
Sugar Prices Rebound on Higher Crude Prices and Strength in the Brazilian Real
Oct NY world sugar #11 (SBV19) this morning is up by +0.08 (+0.70%), and Oct ICE London white sugar #5 (SWV19) is up by +1.20 (+0.39%). Sugar prices are moving higher today on strength in crude prices and the Brazilian real. Higher crude prices benefit ethanol prices and may prompt Brazil's sugar mills to divert more cane crushing toward ethanol production rather than sugar production, thus reducing sugar supplies. A stronger real discourages export selling by Brazil's sugar producers. Sugar prices fell to 1-1/2 week lows Tuesday on the outlook for robust sugar production in India, the world's second-largest sugar producer. Researcher Marex Spectron said Monday that beneficial weather could boost India 2019/20 sugar production to 30 MMT, which would be 6% higher than the 28.2 MMT estimate from the Indian Sugar Mills Association. Ample monsoon rains in India should benefit India's sugar crop after India's Meteorological Department on Aug 8 said India's July monsoon rains were 298.4 mm, 4.6% more than the long-term average. A bullish factor for sugar was last Wednesday's report from Citigroup predicting a supply tightening to a 2019/20 global sugar deficit of -7.2 MMT from a 2018/19 surplus of +2.5 MMT. Sugar has support from Unica data on Aug 5 that showed sugar production in Brazil's Center-South region in the second half of July fell by -5.5% y/y to 2.478 MMT, with cumulative production in the 2019-20 marketing year through July falling -9.9% y/y to 13.334 MMT. Another positive for sugar was the action by India's cabinet on July 24 to create a buffer stock of 4 million MT of sugar for 1-year starting Aug 1 in an attempt to lock up supply and support domestic sugar prices.
Oct NY world sugar #11 (SBV19) this morning is up by +0.08 (+0.70%), and Oct ICE London white sugar #5 (SWV19) is up by +1.20 (+0.39%). Sugar prices are moving higher today on strength in crude prices and the Brazilian real. Higher crude prices benefit ethanol prices and may prompt Brazil's sugar mills to divert more cane crushing toward ethanol production rather than sugar production, thus reducing sugar supplies. A stronger real discourages export selling by Brazil's sugar producers. Sugar prices fell to 1-1/2 week lows Tuesday on the outlook for robust sugar production in India, the world's second-largest sugar producer. Researcher Marex Spectron said Monday that beneficial weather could boost India 2019/20 sugar production to 30 MMT, which would be 6% higher than the 28.2 MMT estimate from the Indian Sugar Mills Association. Ample monsoon rains in India should benefit India's sugar crop after India's Meteorological Department on Aug 8 said India's July monsoon rains were 298.4 mm, 4.6% more than the long-term average. A bullish factor for sugar was last Wednesday's report from Citigroup predicting a supply tightening to a 2019/20 global sugar deficit of -7.2 MMT from a 2018/19 surplus of +2.5 MMT. Sugar has support from Unica data on Aug 5 that showed sugar production in Brazil's Center-South region in the second half of July fell by -5.5% y/y to 2.478 MMT, with cumulative production in the 2019-20 marketing year through July falling -9.9% y/y to 13.334 MMT. Another positive for sugar was the action by India's cabinet on July 24 to create a buffer stock of 4 million MT of sugar for 1-year starting Aug 1 in an attempt to lock up supply and support domestic sugar prices.
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