Sugar Prices Underpinned by Production Woes in Thailand and India

March NY world sugar #11 (SBH23) on Tuesday closed up +0.44 (+2.18%), and March London white sugar #5 (SWH23) closed up +10.90 (+1.97%).

Sugar prices Tuesday posted moderate gains, with London sugar posting a 5-week high and NY sugar holding just below last Thursday's 5-3/4 year nearest-futures high.

Sugar prices are underpinned by the outlook for smaller sugar production from Thailand and India.  StoneX Financial said last 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 last Wednesday it sees India's sugar mills diverting 4.5 MMT to 5.0 MMT of sugar to ethanol production in 2022/23.

A supportive factor for sugar is reduced 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 last Thursday forecasted that EU 2022/23 sugar output would fall -7% y/y to 15.5 MMT.

A bearish factor for sugar was Monday's news from the India Sugar Mills Association (ISMA) that India's Oct-Dec 15 sugar production rose +5.4% y/y to 8.21 MMT.  Also,  last Thursday, India's Food Secretary said his country would consider allowing additional sugar exports in January.  India is the world's second-largest sugar exporter.

Increased sugar output in Brazil is bearish for sugar prices after Unica reported last 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 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.

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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