Sugar Falls on a Slump in Crude Oil Prices

October NY world sugar #11 (SBV22) on Thursday closed down -0.32 (-1.71%), and Oct London white sugar #5 (SWV22) closed down -3.30 (-0.62%).

Sugar prices Thursday tumbled to 2-week lows and closed moderately lower.  Coffee prices fell on the -3.6% sell-off in crude oil prices (CLU22) and weakness in the Brazilian real (^USDBRL).  The Brazilian real Thursday fell to a 5-3/4 month low against the dollar.  A weaker real encourages export selling from Brazil's sugar producers.  Weaker oil and ethanol prices imply less ethanol crushing in Brazil and more sugar crushing.

Sugar prices were already on the defensive on signs that India may allow additional sugar exports weighed on sugar prices.  A report from Bloomberg Wednesday said that India's government is considering allowing additional export sales of 1.0-1.2 MMT of sugar exports for the year ending September 30 to help India's sugar mills from defaulting on export contracts.  That's on top of the current quota of 10 MMT of sugar exports.

Reduced sugar output in Brazil is bullish for prices.  Unica reported last Tuesday that Brazil 2022/23 Center-South sugar production through June was 9.68 MMT, down -21.6% y/y, with the sucrose content per ton of crushed sugar cane down -4.4% y/y to 127.25 kg per ton.

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.

• Coffee Closes Moderately Lower on Brazilian Real Weakness
• Coffee Slips on Weakness in Brazilian Real
• Cocoa Moves Higher on Signs of Strength in Global Chocolate Demand
• Sugar Slides as India May Allow Additional Sugar Exports