May NY world sugar #11 (SBK23) on Thursday closed up +0.27 (+1.29%), and May London white sugar #5 (SWK23) closed up +6.30 (+1.08%).
Sugar prices Thursday rallied, with May NY sugar posting a contract high and London sugar climbing to a 5-3/4 month nearest-futures high. Â Sugar rose after the U.S. Climate Prediction Center Thursday said the La Nina weather pattern, which has affected weather patterns over the last three years, has ended and that an El Nino weather pattern has a 61% chance of developing in the second half of this year. Â If that El Nino pattern occurs, it could bring heavy rains to Brazil and drought to India, negatively impacting crop production. Â
Weakness in crude prices limited gains in sugar after WTI crude (CLJ23) Thursday fell more than -1% t a 1-week low.  Lower crude prices undercut ethanol prices and may prompt the world’s sugar mills to divert more cane crushing toward sugar production rather than ethanol, thus boosting sugar supplies.
Last Tuesday, sugar prices rallied to a 6-year nearest-futures (H23) high as global supply concerns sparked fund buying of sugar. Â 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. Â 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. Â
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. 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 is the prospect of additional sugar exports from India. Â 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. Â India has already allowed 6 MMT of sugar exports. Â 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. Â
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. Â Also, Â Datagro on Wednesday projected that 2023/24 sugar production in Brazil's Center South would climb by +13.1% y/y to 38.3 MMT. Â 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. Â Likewise, Thailand's 2022/23 sugar exports are projected to increase +17% y/y to 9.05 MMT. Â 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. Â Thailand is the world's second-largest sugar exporter. Â
More Sugar News from Barchart
- Arabica Under Pressure on Strength in Central American Coffee Exports
- Arabica Closes Lower on Dollar Strength and Robust Central American Coffee Exports
- Sugar Prices Fall Back on the Outlook for Stronger Brazil Sugar Output
- A Stronger Dollar Weighs on Cocoa Prices
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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