March NY world sugar #11 (SBH23) on Wednesday closed down -0.16 (-0.79%), and March London white sugar #5 (SWH23) closed down -16.40 (-2.87%).
Sugar prices Wednesday dropped to 1-week lows on an improved supply outlook. Â Conab on Tuesday hiked its Brazil 2022/23 sugar production estimate to 36.4 MMT from an Aug estimate of 33.9 MMT.
Sugar prices also fell Wednesday due to a -1.7% decline in WTI crude oil prices. Â Weaker crude prices undercut ethanol prices and may prompt Brazil's sugar mills to divert more cane crushing toward sugar production rather than ethanol, thus boosting sugar supplies.
In a bullish factor, StoneX Financial said Dec 14 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." Â Also, India's Sugar Mills Association (ISMA) said that it sees India's sugar mills diverting 4.5 MMT to 5.0 MMT of sugar to ethanol production in 2022/23.
Reduced sugar production in Europe is another supportive factor for prices, as that may force European sugar and food manufacturers to import sugar, leading to tighter global supplies. Â The European Association of Sugar Manufacturers on Dec 8 forecasted that EU 2022/23 sugar output would fall -7% y/y to 15.5 MMT.
A bearish factor for sugar was last 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. Â Also, Â last Thursday, India's Food Secretary said his country would consider allowing additional sugar exports in January. Â India is the world's second-largest sugar exporter.
Higher sugar output in India is bearish for prices. Â 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. Â In 2021/22, India's sugar production rose +2.9% y/y to 35.8 MMT. Â 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. Â Also, ISO projected that the 2022/23 global sugar market would be in a surplus of +6.2 MMT.
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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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