Sugar Jumps on the Outlook for Smaller Sugar Exports from Thailand and India

March NY world sugar #11 (SBH23) on Wednesday closed up +0.53 (+2.68%), and March London white sugar #5 (SWH23) closed up +14.50 (+2.68%).

Sugar prices Wednesday rallied to 1-month highs and closed moderately higher.   The outlook for smaller sugar exports from Thailand and India is boosting sugar prices.  StoneX Financial said Wednesday that due to a delay in Thailand's sugar harvest, projections for Thai sugar exports of 1 MMT to 2 MMT this quarter "will not materialize."  Also, India's Sugar Mills Association (ISMA) said Wednesday it sees India's sugar mills diverting 4.5 MMT to 5.0 MMT of sugar to ethanol production in 2022/23.

A  jump of more than +2% in crude oil prices (CLF23) Wednesday to a 1-week high supported sugar.  Higher crude prices benefit ethanol and prompt Brazil's sugar mills to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies.

Increased sugar output in Brazil is bearish for sugar prices after Unica reported Monday that Brazil's Center-South sugar output in the 2022/23 marketing year through November rose +2.8% y/y to 32.940 MMT.  

A large long position by commodity funds of London white sugar futures could prompt long liquidation pressure.  Last Friday's weekly Commitment of Trades (COT) report showed funds boosted their net-long London white sugar positions by +1,500 in the week ending Dec 6 to a 3-year high of 32,999 positions.

A supportive factor for sugar is smaller sugar production in Europe, which may force European sugar and food manufacturers to import sugar, leading to tighter global supplies.  The European Association of Sugar Manufacturers Thursday forecasted that EU 2022/23 sugar output will fall -7% y/y to 15.5 MMT.

Sugar prices were undercut when StoneX on Dec 1 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.

Higher sugar output in India is bearish for prices.  On Oct 24, the India Sugar Mills Association ISMA 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.  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.  Last Friday, (ISMA) reported that India's Oct-Nov sugar production rose +1.5% y/y to 4.79 MMT.

In a bearish factor, the International Sugar Organization (ISO) on Nov 22 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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