White Sugar #5 Futures Market News and Commentary
Sugar Prices Close Lower as They Follow a Slump in Crude Oil
July NY world sugar #11 (SBN19) on Wednesday closed down by -0.19 (-1.61%) and Aug ICE London white sugar #5 (SWQ19) closed down by -3.50 (-1.07%). A slump in crude oil prices Wednesday undercut sugar prices after crude sank to a 1-week low. Weak crude prices are negative for ethanol prices and may prompt Brazil's sugar mills to divert more cane-crushing toward sugar production rather than ethanol production, this boosting sugar supplies. July NY sugar tumbled to a 7-1/2 month low Tuesday and Aug London sugar dropped to a 9-month low on the prospects for increased exports from India. The India Sugar Mills Association forecast India's sugar stockpiles may reach a record high of 14.7 MMT by Sep 30, and Meir Commodities India Pvt projects India will boost its 2019/20 sugar exports to 6 MMT from 3 MMT exported this year in order to curb its excessive sugar reserves. Robust global sugar output continues to weigh on sugar prices. 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. Another bearish factor for sugar is weakness in the Brazilian real which tumbled to a fresh 7-1/2 month low against the dollar Monday, which encourages export selling by Brazil's sugar producers. A bullish factor for sugar prices is strong ethanol demand in Brazil. Unica reported Tuesday that Brazil Jan-Apr sales of hydrous ethanol surged +35% y/y to 7 billion liters. Also, on Monday, researcher Green Pool Commodity Specialists raised their forecast for a 2019/20 global sugar deficit to -3.0 MMT from a prior forecast of -1.6 MMT, citing increased ethanol production from Brazil's sugar mills at the expense of sugar production.
July NY world sugar #11 (SBN19) on Wednesday closed down by -0.19 (-1.61%) and Aug ICE London white sugar #5 (SWQ19) closed down by -3.50 (-1.07%). A slump in crude oil prices Wednesday undercut sugar prices after crude sank to a 1-week low. Weak crude prices are negative for ethanol prices and may prompt Brazil's sugar mills to divert more cane-crushing toward sugar production rather than ethanol production, this boosting sugar supplies. July NY sugar tumbled to a 7-1/2 month low Tuesday and Aug London sugar dropped to a 9-month low on the prospects for increased exports from India. The India Sugar Mills Association forecast India's sugar stockpiles may reach a record high of 14.7 MMT by Sep 30, and Meir Commodities India Pvt projects India will boost its 2019/20 sugar exports to 6 MMT from 3 MMT exported this year in order to curb its excessive sugar reserves. Robust global sugar output continues to weigh on sugar prices. 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. Another bearish factor for sugar is weakness in the Brazilian real which tumbled to a fresh 7-1/2 month low against the dollar Monday, which encourages export selling by Brazil's sugar producers. A bullish factor for sugar prices is strong ethanol demand in Brazil. Unica reported Tuesday that Brazil Jan-Apr sales of hydrous ethanol surged +35% y/y to 7 billion liters. Also, on Monday, researcher Green Pool Commodity Specialists raised their forecast for a 2019/20 global sugar deficit to -3.0 MMT from a prior forecast of -1.6 MMT, citing increased ethanol production from Brazil's sugar mills at the expense of sugar production.
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