Sugar Gains on a Weak Dollar and Decline in Brazil's Sugar Production

March NY world sugar #11 (SBH23) on Friday closed up +0.23 (+1.18%), and Dec London white sugar #5 (SWZ22) closed up +11.40 (+2.05%).

Sugar prices Friday extended their 2-week rally, with NY sugar climbing to a 5-month nearest-futures high and London sugar posting a 2-month high.  Positive carry-over from Thursday supported sugar prices when Unica reported that Brazil's Center-South sugar output in the 2022/23 marketing year through October was down -3.1% y/y to 30.281 MMT.  Also, a weak dollar boosted sugar prices after the dollar index Friday tumbled to a 2-3/4 month low.

Sugar prices also have support after India last Saturday announced that it would allow 6 MMT of sugar exports in the 2022/23 season.  That is well below the 2021/22 quota of 11.2 MMT and below the 8 MT quota that the Indian government previously considered due to a larger-than-expected Indian sugar surplus, according to Bloomberg.

In a bearish factor, the International Sugar Organization (ISO) on Oct 25 projected that global 2022/23 sugar production would climb +4.5% y/y to a 5-year high of 181.9 MMT.  Also, ISO projected that the 2022/23 global sugar market would be in a surplus of +5.6 MMT.

A negative factor for sugar was Tuesday’s projection from Safras & Mercado that Brazil’s Center South 2023/24 sugar cane crushing will climb +3.4% y/y to 620.7 MMT.

Higher sugar output in India is bearish for prices.  On Oct 24, the Indian Sugar Mills Association 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.

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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