NY Sugar Prices Fall Despite Decline in Brazil Center-South Sugar Production

October NY world sugar #11 (SBV22) on Wednesday closed down -0.07 (-0.40%), and Oct London white sugar #5 (SWV22) closed up +0.20 (+0.04%).

Sugar prices Wednesday settled mixed, with NY sugar falling to a new 1-year low.  Over the past week, sugar prices have been defensive on signs that India may allow additional sugar exports.  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.

NY sugar prices Wednesday recovered from their worst levels, and London sugar posted modest gains, after Unica reported that Brazil 2022/23 Center-South sugar production through mid-July was 12.661 MMT, down -17.4% y/y, with the sucrose content per ton of crushed sugar cane down -3.3% y/y at 130.45 kg per ton.

A supportive factor for sugar Wednesday was strength in the Brazilian real.  The Brazilian real (^USDBRL) Wednesday climbed to a 2-1/2 week high against the dollar.  A stronger real discourages 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.

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