Sugar Under Pressure from Concern India May Boost Sugar Exports

October NY world sugar #11 (SBV22) on Monday closed down -0.42 (-2.35%), and Oct London white sugar #5 (SWV22) closed down -11.30 (-2.16%).

Sugar prices Monday extended their week-long slide, with NY sugar falling to a 1-year low and London sugar dropping to a 5-month low.  Sugar prices have been on the defensive over the past week on signs that India may allow additional sugar exports weighed on sugar prices.  A report from Bloomberg last 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 would be on top of the current quota of 10 MMT of sugar exports.

Weakness in the Brazilian real is also bearish for sugar prices.  The Brazilian real (^USDBRL) last Thursday fell to a 6-month low against the dollar.  A weaker real encourages export selling from 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.

Reduced sugar output in Brazil is bullish for prices.  Unica reported July 12 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.
 

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