May NY world sugar #11 (SBK23) on Friday closed up +0.03 (+0.15%), and May London white sugar #5 (SWK23) closed up +0.40 (+0.07%).
Sugar prices Friday posted modest gains. Prices found support today after India said it wouldn't allow additional sugar exports beyond the 6.1 MMT it has already allowed this season. The government is concerned that a smaller Indian sugar crop this year could tighten domestic supplies, so it decided not to allow additional sugar exports. However, sugar prices fell back from their best levels Friday after crude prices (CLH23) tumbled more than -2% to a 1-1/2 week low. Weaker crude prices undercut ethanol prices and may prompt Brazil's sugar sills to divert more cane crushing toward sugar production rather than ethanol, thus boosting sugar supplies.
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 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.
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.
More Sugar News from Barchart
- Cocoa Prices Push Higher on Global Supply Concerns
- Coffee Price Jump on Forecasts for Heavy Rain in Brazil
- Friday's Last Call: Soybean Charts
- Cocoa Prices Underpinned by Default Concerns of Ivory Coast Cocoa Exporters
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. For more information please view the Barchart Disclosure Policy here.
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