Sugar Rallies on the Outlook for Lower Global Sugar Production

March NY world sugar #11 (SBH23) on Wednesday closed up +0.17 (+0.83%), and March London white sugar #5 (SWH23) closed up +2.00 (+0.35%).

Sugar prices Wednesday closed moderately higher gains, with NY sugar posting a fresh 5-3/4 year nearest-futures high.  The outlook for smaller sugar production from Thailand and India is pushing prices higher.  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.

Another bullish factor for sugar was Wednesday's rally in the Brazilian real (^USDBRL) to a 6-week high.  The stronger real discourages export selling from Brazil's sugar producers.

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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