October NY world sugar #11 (SBV22) on Friday closed up +0.50 (+2.70%), and Aug London white sugar #5 (SWQ22) closed up +13.90 (+2.50%).
Sugar prices Friday rallied moderately, with NY sugar posting a 4-week high and London sugar posting a 3-week high. Â Sugar prices moved higher on strength in crude oil and the Brazilian real. Â Crude prices (CLQ22) rose more than +1% Friday, 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. Â
Strength in the Brazilian real (^USDBRL) is bullish for sugar prices after the real Friday climbed to a 1-week high against the dollar. Â The stronger real discourages export selling by Brazil's sugar producers.
The outlook for larger sugar crop sizes in India and Thailand is bearish for sugar prices. Â 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. Â India is the world's second-largest sugar producer. Â 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. Â Meanwhile, Thailand's Office of the Cane & Sugar Board estimated that Thailand would export 7 MMT of sugar this (2021/22) marketing year. Â 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. Â 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. Â Unica last Tuesday reported that Brazil 2022/23 Center-South sugar production through Jun 15 fell -23.6% y/y to 7.193 MMT.
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