Sugar Prices Climb on Strength in Crude Oil and Brazilian Real

March NY world sugar #11 (SBH23) on Tuesday closed up +0.15 (+0.77%), and March London white sugar #5 (SWH23) closed up +5.10 (+0.96%).

Sugar prices Tuesday recovered from early losses and posted moderate gains.  Strength in crude prices Tuesday was supportive for sugar.  Higher crude prices benefit ethanol and may prompt Brazil's sugar mills to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies.

Strength in the Brazilian real (^USDBRL) is bullish for sugar after the real Tuesday climbed to a 2-week high against the dollar.  A stronger real discourages export selling from Brazil's sugar producers.  

Strength in Brazil's sugar production is bearish for prices after Unica reported last Friday that Brazil's Center-South sugar output in the 2022/23 marketing year through mid-November rose +0.3% y/y to 31.966 MMT.

A negative factor for sugar was last Monday's forecast from Czarnikow that Brazil's Center-South mills would produce 34.7 million metric tons of sugar in 2023-24 (Apr/Mar), up +7% y/y and the highest in three years.

Sugar prices are also under pressure after the Organization of Cane Producers Association in Brazil forecasted last Monday that Brazil's sugar output in 2022/23 at 36.9 million metric tons due to favorable weather and that production would reach 37.2 million metric tons in 2023/24.

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.  However, the Indian Sugar Mills Association earlier this month said that India's sugar production from Oct 1 to Nov 15 fell by -4.3% y/y.

In a bearish factor, the International Sugar Organization (ISO) last Tuesday projected that global 2022/23 sugar production would climb +5.5% y/y to a record high of 182.1 MMT.  Also, ISO projected that the 2022/23 global sugar market would be in a surplus of +6.2 MMT.
 

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