Sugar Prices Under Pressure from Weakness in the Brazilian Real

July NY world sugar #11 (SBN22) on Monday closed down -0.07 (-0.38%), and Aug London white sugar #5 (SWQ22) closed down -2.00 (-0.37%).

Sugar prices Monday extended their week-long decline, with NY sugar falling to a 3-3/4 month low and London sugar sliding to a 6-week low.  Concern that Brazil's sugar producers will ramp up export selling weighs on sugar prices after the Brazilian real (^USDBRL) last Friday fell to a 4-1/2 month low against the dollar.  The weaker real encourages export selling by Brazil's sugar producers.

Sugar prices recovered from their worst levels Monday on strength in crude oil prices.   Crude oil prices (CLQ22) rallied +2% Monday, which benefits ethanol prices and may prompt Brazil's sugar mills to divert more cane crushing toward ethanol production rather than sugar, thus curbing 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 from 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.

• Sugar Prices Held Down by Weakness in the Brazilian Real
• Sugar Tumbles on Weakness in Crude and Brazilian Real
• Sugar Prices Follow Crude Oil Lower
• NY Sugar Closes Modestly Higher on Strength in Crude Oil