Sugar Gains on Reports of an India Sugar Export Cap

July NY world sugar #11 (SBN22) on Friday closed up +0.02 (+0.11%), and Aug London white sugar #5 (SWQ22) closed up +2.60 (+0.47%).

Sugar prices on Friday posted modest gains.  Sugar found support Friday in a report from Reuters that said India might cap sugar exports at 6 MMT to 7 MMT starting in October.  However, sugar gave up nearly all of its gains after crude oil plunged.  Crude oil prices (CLN22) Friday plummeted more than -7% to a 4-week low, which undercuts ethanol prices and may prompt Brazil's sugar mills to divert more cane crushing toward sugar production rather than ethanol thus boosting sugar supplies.

On the positive side, Czarnikow Thursday said the global 2022/23 sugar market would see a -1.4 MMT deficit versus the +400,000 MT surplus it projected in May, as low rainfall in Brazil reduced sugarcane yields.

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.

Big Picture Sugar Market Factors:  World sugar production in 2022/23 (Oct/Sep) will climb +2% y/y to 174.400 MMT from 174.000 MMT in 2021/22 (ISO).  The world sugar surplus in 2022/23 will expand to 2.8 MMT from a surplus of +237,000 MT in 2021/22 (ISO).  Sugar production by Brazil, the world's largest sugar producer, in 2020/21 (Apr/Mar) will climb by +32% y/y to 39.3 MMT from 29.8 MMT in 2019/20, as millers divert 46.4% of cane juice to produce sugar (up from 34.9% in 2019/20) (Conab).  Sugar production from India, the world's second-largest sugar producer, will climb +13% y/y to 31 MMT in 2020/21 due to a good monsoon season (India Sugar Mills Association).  Weather concerns in Brazil are a major bullish factor for sugar prices, with Brazil having experienced its worst drought in 100 years, and as several bouts of frost in Brazil have damaged some sugar cane crops. 

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