May NY world sugar #11 (SBK23) on Tuesday closed up +0.15 (+0.72%), and May London white sugar #5 (SWK23) closed up +7.90 (+1.36%).
Sugar prices Tuesday posted moderate gains, with NY sugar climbing to a contract high and London sugar climbing to a 5-3/4 month nearest-futures high. May NY sugar is just below the 6-year nearest-futures (H23) sugar posted last Tuesday. Global supply concerns are sparking fund buying of sugar after the International Sugar Organization (ISO) on Feb 24 raised its 2021/22 global sugar deficit estimate to -2.25 MMT from a November estimate of -1.67 MMT and cut its 2022/23 global sugar surplus estimate to 4.15 MMT from 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 have underlying support from concern about smaller sugar production in India. The Indian Sugar Mills Association (ISMA) on Jan 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.
A bearish factor is the prospect of additional sugar exports from India. Indian Food Minister Singh on Monday said India could allow another 1 MMT of sugar exports if India's 2022/23 sugar output reaches the government target of 33.6 MMT. India has already allowed 6 MMT of sugar exports. The Indian Sugar Mills Association (ISMA) reported last Friday that India's 2022/23 sugar output from Oct-Feb 28 rose +1.8% y/y to 25.76 MMT.
Strong Brazil sugar output is bearish for prices after Unica reported last Monday that Brazil's 2022/23 sugar production through mid-February rose +4.5% y/y to 33.503 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
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- Arabica Coffee Climbs on Tighter Supplies
- Arabica Closes Moderately Higher on Brazilian Real Strength and Smaller Colombian Exports
- Sugar Prices Fall as India May Allow Additional Sugar Exports
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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