Sugar Slightly Lower on Higher Surplus Estimate

March NY world sugar #11 (SBH23) on Thursday closed down -0.01 (-0.05%), and March London white sugar #5 (SWH23) closed down -0.80 (-0.15%).

Sugar prices Thursday gave up an early advance and closed slightly lower.  Concern that weak demand is boosting sugar supplies undercut prices after StoneX boosted its global 2022/23 sugar surplus estimate to 5.2 MMT from a Sep estimate of 3.9 MMT.  StoneX also predicts Brazil's 2023/24 Center South sugar production will climb +5.2% y/y to 35.6 MMT.

Sugar prices Thursday initially posted moderate gains after crude prices (CLF23) rose more than +1% to a 2-week high.  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.

Increased sugar production in Brazil 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.  Also, 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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