Sugar Prices Tumble on Weakness in Crude Oil

July NY world sugar #11 (SBN22) on Wednesday closed down -0.24 (-1.28%), and Aug London white sugar #5 (SWQ22) closed down -8.30 (-1.46%).

Sugar prices Wednesday posted moderate losses, with NY sugar falling to a 1-month low.  Sugar prices were undercut by Wednesday's decline of more than -1% in crude oil prices (CLN22) to a 1-1/2 week low.  Lower crude prices undercut ethanol and may prompt Brazil's sugar mills to divert more cane crushing toward sugar production rather than ethanol, thus boosting sugar supplies.

Ramped-up sugar output in India is bearish for sugar prices after the Indian Sugar Mills Association (ISMA) reported that India's 2021/22 sugar production during Oct 1-May 15 rose +14.4% y/y to 34.88 MMT.

The outlook for larger sugar crop sizes in India and Thailand is bearish for sugar prices.  On April 15, the ISMA raised India's 2021/22 sugar production estimate to 35 MMT from 33.3 MMT, up +12.2% y/y, and said sugar exports would jump to a record 9 MMT.  India is the world's second-largest sugar producer.  Meanwhile, Thailand's Office of the Cane & Sugar Board estimated that Thailand would export 7 MMT of sugar this (2021/22) marketing year.  Thailand is the world's second-largest sugar exporter.

A bearish factor for sugar was the projection from Conab on April 27 for Brazil 2022/23 sugar production to increase by +15% y/y to 40.3 MMT as the crop recovers from the past season's adverse weather.  Also, the USDA's FAS on April 22 projected Brazil's 2022/23 sugar production would climb +2.9% y/y to 36.37 MMT and that 2022/23 Brazil sugar exports would increase by +3.7% y/y to 26.6 MMT.

In a positive factor for sugar prices, Unica on May 25 reported that Brazil 2022/23 Center-South sugar production through May 15 fell -39.8% y/y to 2.737 MMT.