Sugar Closes Slightly Higher on Smaller Sugar Output in Brazil

July NY world sugar #11 (SBN22) on Wednesday closed up +0.02 (+0.11%), and Aug London white sugar #5 (SWQ22) closed up +1.30 (+0.24%).

Sugar prices Wednesday extended Tuesday gains up to 1-week highs.  Sugar prices are finding support from reduced sugar production in Brazil.  Unica on Tuesday reported that Brazil 2022/23 Center-South sugar production through Jun 15 fell -23.6% y/y to 7.193 MMT.

Sugar prices Wednesday fell back from their best levels after crude oil prices (CLQ22) erased an early rally and moved lower.  Lower crude oil prices undercut 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 Monday, NY sugar fell to a 3-3/4 month low, and London sugar slid to a 6-week low.  Concern that Brazil's sugar producers will ramp up export selling weighed on prices after the Brazilian real (^USDBRL) fell to a 4-1/2 month low against the dollar.  The weaker real encourages export selling by Brazil's sugar producers.

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.

• Sugar Closes Moderately Higher on Reduced Brazil Sugar Production
• Sugar Prices Under Pressure from Weakness in the Brazilian Real
• Sugar Prices Held Down by Weakness in the Brazilian Real
• Sugar Tumbles on Weakness in Crude and Brazilian Real