Sugar Prices Retreat as India May Allow Additional Sugar Exports

March NY world sugar #11 (SBH23) on Thursday closed down -0.31 (-1.53%), and March London white sugar #5 (SWH23) closed down -9.80 (-1.77%).

Sugar prices Thursday gave up an early rally and closed moderately lower after India's Food Secretary said his country would consider allowing additional sugar exports in January.  India is the world's second-largest sugar exporter.

Sugar prices Thursday initially moved higher, with NY sugar posting a 5-3/4 year nearest-futures high, on the outlook for smaller sugar production from Thailand and India.  StoneX Financial on Wednesday said 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 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.

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.  

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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