March NY world sugar #11 (SBH23) on Thursday closed down -0.54 (-2.66%), and March London white sugar #5 (SWH23) closed down -11.20 (-2.06%).
Sugar prices Thursday closed moderately lower. Â A plunge of more than -4% in crude oil prices Thursday to a 1-month low undercut sugar prices. Â Lower crude prices undercut ethanol prices and may prompt Brazil's sugar mills to divert more cane crushing toward sugar production rather than ethanol, thus boosting sugar supplies. Â
Weakness in the Brazilian real also weighed on sugar as the real (^USDBRL) Thursday tumbled to a 10-month low against the dollar. Â A weaker real encourages export selling by Brazil's sugar producers.
Sugar prices have carry-over support from last Thursday 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.
Sugar prices also have support after India stated on Nov 5 announced that it would allow 6 MMT of sugar exports in the 2022/23 season. Â According to Bloomberg, 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.
In a bearish factor, the International Sugar Organization (ISO) Tuesday projected that global 2022/23 sugar production would climb +5.5% y/y to a record high of 182.1 MMT. Â Also, ISO projected that the 2022/23 global sugar market would be in a surplus of +6.2 MMT.
A negative factor for sugar was last 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. Â 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. Â In 2021/22, India's sugar production rose +2.9% y/y to 35.8 MMT. Â India is the world's second-largest sugar producer. Â 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. Â 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. Â 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. Â 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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More Sugar News from Barchart
- Arabica Coffee Falls on Abundant Supplies and Brazilian Real Weakness
- Coffee Sinks on Abundant Supplies and Brazilian Real Weakness
- Cocoa Prices Remain Underpinned by Supply Concerns
- Sugar Prices Give Up Early Gains as Crude Falls
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