Sugar Moderately Higher on a Rebound in Commodity Prices

October NY world sugar #11 (SBV22) on Thursday closed up +0.53 (+2.95%), and Aug London white sugar #5 (SWQ22) closed down -0.30 (-0.05%).

Sugar prices Thursday closed mostly higher on a broad-based rebound in commodity prices after China said it was considering a $220 billion stimulus plan.  A +5% rally in crude prices (CLQ22) Thursday was also bullish for sugar prices.  Higher crude prices benefit ethanol and may prompt Brazil's sugar mills to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies.  

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.

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 Gains on Some Short-Covering
• 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