Sugar Prices Close Higher on Signs of Solid Sugar Demand

May NY world sugar #11 (SBK23) on Tuesday closed up +0.32 (+1.63%), and May London white sugar #5 (SWK23) closed up +10.70 (+1.91%).

Sugar prices Tuesday closed moderately higher on signs of solid physical sugar demand.  Deliveries on the expired March 2023 London sugar contract Monday were a 4-year low of 191 MT (versus the year-earlier amount of 359 MT for the March 2022 contract), which indicated strong physical sugar demand since less sugar was dumped into sugar futures deliveries.  

A bearish factor for sugar is an increase in Thailand's sugar output.  Green Pool Commodity Specialists on Monday said that Thailand's 2023 sugar production reached 6.59 MMT by Feb 8, up nearly +10% from last season, with sugar content in the cane crop at a record high.  Thailand is the world's second-largest sugar exporter.  

Strong Brazil sugar output is bearish for prices after Unica reported last Friday that Brazil's 2022/23 sugar production through January rose +4.5% y/y to 33.500 MMT.   Brazil is the world's largest sugar producer.

Sugar prices have rallied sharply over the past month on concern about smaller global sugar production, with NY sugar posting a 6-1/4 nearest-futures high last Friday.  On Jan 31, the Indian Sugar Mills Association (ISMA) cut its 2022/23 India sugar production estimate to 34 MMT from an Oct estimate of 36.5 MMT and cut its India 2022/23 sugar export estimate to 6.1 MMT from an Oct forecast of 9 MMT.  In addition, the  ISMA said that it sees India's sugar mills diverting 4.5-5.0 MMT of sugar to ethanol production in 2022/23.  India is the world's second-largest sugar producer.

Reduced sugar production in Europe is a supportive factor for sugar prices.  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 Thursday's report from the Indian Sugar Mills Association (ISMA) that showed India's 2022/23 sugar output from Oct-Jan was up +3.4% y/y at 19.35 MMT.  Also, the Thai Sugar Mills Corp on Feb 1 projected Thailand's 2022/23 sugar production would climb +14% y/y to 11.55 MMT.  Likewise, Thailand's 2022/23 sugar exports are projected to increase +17% y/y to 9.05 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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