Sugar Prices Tumble as ISO Projects Robust Global Sugar Production

March NY world sugar #11 (SBH23) on Wednesday closed down -0.25 (-1.38%), and Dec London white sugar #5 (SWZ22) closed down -5.00 (-0.95%).

Sugar prices Wednesday extended this week's losses, with NY sugar dropping to a 3-week low and London sugar falling to a 5-week low.  Prices are under pressure on an easing of sugar supply concerns.  The International Sugar Organization (ISO) late Tuesday projected global 2022/23 sugar production would climb +4.5% y/y to 181.9 MMT, a 5-year high.  Also, ISO projects the 2022/23 global sugar market to be in surplus by +5.6 MMT.

Higher sugar output in India is bearish for prices.  The Indian Sugar Mills Association last Monday forecasted that India's 2022/23 sugar production (Oct 1-Sep 30) would climb +2% y/y to 36.5 MMT as Indian farmers boosted their planted cane acreage by +5.4% y/y to 5.6 mln hectares.  In 2021/22, India's sugar production rose +2.9% y/y to 35.8 MMT.  India is the world's second-largest sugar producer.  Also, robust sugar exports from India are bearish for prices after India 2021/22 sugar exports jumped +57% y/y to a record 11 MMT.  

In a bearish factor, StoneX on September 18 projected that Brazil Center-South 2023/24 sugar production would climb +5.7% y/y to 35.2 MMT.  StoneX also projects that global 2023/24 sugar production would climb +3% y/y to 194.4 MMT on rising supplies from Brazil, India, and Thailand.  StoneX predicts a 2022/23 global sugar surplus of 3.9 MMT.

Signs of smaller sugar production in Brazil are supportive of prices.  Unica reported Wednesday that Center-South sugar output in the 2022/23 marketing year through mid-October was down -7.3% y/y to 28.163 MMT.  Also, Conab, on August 19, cut its estimate for the 2022/23 Brazil sugar crop to 33.9 MMT from an April forecast of 40.3 MMT, citing lower plantings and falling sugar cane yields.

This past summer's hot and dry weather in Europe, the world's third-largest sugar producer, caused smaller sugar beet yields and lower sugar production, which is bullish for sugar prices.  Czarnikow Group predicts sugar output in the European Union (EU) and the UK should total 16.4 MMT this year, about 1 MMT lower than last year, which means the EU may have to import more sugar than usual.

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