May NY world sugar #11 (SBK23) on Friday closed down -0.67 (-3.29%), and May London white sugar #5 (SWK23) closed down -12.70 (-2.21%).
Sugar prices Friday whipsawed to 3-week highs and then down to 1-week lows and finally closed sharply lower. Sugar found early support Friday after the International Sugar Organization (ISO) raised its 2021/22 global sugar deficit estimate to -2.25 MMT from a prior estimate of -1.67 MMT and cut its 2022/23 global sugar surplus estimate to 4.15 MMT from a November estimate of 6.19 MMT. However, the ISO still projects that global 2022/23 sugar production would climb +4.8% y/y to a record high of 180.4 MMT.
Sugar prices, however, gave up their early gains Friday and retreated due to a rally in the dollar index (DXY00) to a 1-1/2 month high. The dollar’s rally encouraged heavy profit-taking by funds as sugar prices failed from the early 3-week high.
Sugar prices have carry-over support from last Friday when 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 could tighten domestic supplies this year, so it decided not to allow additional exports. However, sugar prices fell back from their best levels, with London sugar falling into negative territory, after the Indian Sugar Mills Association (ISMA) reported that India's 2022/23 sugar output from Oct-Feb 15 rose +2.8% y/y to 22.84 MMT.
Sugar prices have underlying support from concern about smaller global sugar production. The Indian Sugar Mills Association (ISMA) on January 31 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.
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 the Feb 1 projection from the Thai Sugar Mills Corp that 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. Green Pool Commodity Specialists Monday said that Thailand's 2023 sugar production reached 6.59 MMT as of 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.
More Sugar News from Barchart
- Coffee Falls as Dollar Strength Fuels Long Liquidation Pressure
- Long Liquidation Sparked by a Strong Dollar Weighs on Coffee Prices
- Cocoa Prices Fall Back as Dollar Strength Sparks Long Liquidation
- Sugar Rallies on Strength in Brazilian Real and Crude Oil
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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