Sugar Gains on Some Short-Covering

October NY world sugar #11 (SBV22) on Wednesday closed up +0.19 (+1.07%), and Aug London white sugar #5 (SWQ22) closed up +7.30 (+1.33%).

Sugar prices Wednesday closed moderately higher, with London sugar climbing to a 2-week high.  After the recent plunge in sugar prices over the past week to Tuesday's 4-month low, technical buying from oversold conditions lifted prices.  

Weakness in the Brazilian real (^USDBRL) is bearish for sugar prices after the real Wednesday fell to a 5-1/4 month low against the dollar.  The weaker real encourages export selling by Brazil's sugar producers.

A plunge in crude prices (CLQ22) is also bearish for sugar after crude oil Wednesday sank to a 2-3/4 month low.  Weakness in crude prices 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 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.

A supportive factor for sugar is reduced sugar production in Brazil.  Unica last Tuesday reported that Brazil 2022/23 Center-South sugar production through Jun 15 fell -23.6% y/y to 7.193 MMT.
 

• Sugar Sinks on Double Whammy of a Weak Brazilian Real and Plunging Crude
• Sugar Prices Tumble on Weakness in the Brazilian Real
• Sugar Prices Firm on Reduced Brazil Sugar Production
• Sugar Closes Slightly Higher on Smaller Sugar Output in Brazil