Sugar Prices Follow Crude Oil Lower

July NY world sugar #11 (SBN22) on Wednesday closed down -0.21 (-1.13%), and Aug London white sugar #5 (SWQ22) closed down -6.60 (-1.18%).

Sugar prices Wednesday posted moderate losses, with London sugar falling to a 4-week low.  Weakness in crude oil prices undercut sugar prices.  Crude oil prices (CLN22) fell more than -2% Wednesday to a 6-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.  

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.  The Indian Sugar Mills Association (ISMA) recently reported that India's 2021/22 sugar production during Oct 1-May 15 rose +14.4% y/y to 34.88 MMT.  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.
 

• NY Sugar Closes Modestly Higher on Strength in Crude Oil
• Sugar Gains on Reports of an India Sugar Export Cap
• NY Sugar Prices Closes Higher as Crude Rallies
• Sugar Prices Tumble on Weakness in Crude Oil