October NY world sugar #11 (SBV24) Tuesday closed up +0.11 (+0.58%), and Oct London ICE white sugar #5 (SWV24) closed up +1.90 (+0.35%).
Sugar prices on Tuesday climbed to 1-week highs and posted moderate gains after the Indian Sugar and Bio-energy Manufacturers Association (ISM) projected India's 2024/25 sugar production would fall by 2% y/y to 33.31 MMT.
Weakness in crude prices Tuesday limited gains in sugar after crude (CLU24) tumbled to a 7-week low. Lower crude prices undercut ethanol prices and may prompt the world's sugar mills to divert more cane crushing toward sugar production than ethanol, thus boosting sugar supplies.
Unica reported last Thursday that Brazil's Center-South sugar output in the first half of July fell -9.7% y/y to 2.939 MMT. However Center-South sugar production in the marketing year through mid-July was still up by +10.4% y/y at 17.140 MMT.
Sugar prices also have support after StoneX said last Wednesday that it expects a global sugar surplus of 1.2 million MT for the 2024/25 season (Oct/Sep), down from its 2023/24 surplus estimate of 4.6 million MT.
Above-normal monsoon rain in India, the world's second-largest sugar producer, is bearish for sugar prices. The Indian Meteorological Department reported Monday that India received 430.2 mm of rain during the current monsoon season as of July 28, up +3% from the comparable long-term average of 418.9 mm.
Sugar prices are also under pressure after the Indian Sugar and Bio-energy Manufacturers Association (ISM) on July 3 reported India's 2023/24 sugar reserves at 9.1 MMT and reported a surplus of 3.6 MMT. The group urged the government to allow increased exports of surplus sugar. India has restricted sugar exports since October 2023 to maintain adequate domestic supplies. India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season to September 30 after allowing exports of a record 11.1 MMT in the previous season. Separately, the Indian Sugar and Bioenergy Manufacturers Association reported on May 13 that India's 2023/24 sugar production from Oct-Apr fell -1.6% y/y to 31.4 MMT.
Conab, Brazil's crop agency, projected on April 25 that Brazil's sugar production for the overall 2024/25 marketing year will climb +1.3% y/y to a record 46.292 MMT as 2024/25 sugar acreage in Brazil increases by +4.1% to 8.7 million hectares (21.5 million acres), the most in seven years. For the 2023/24 marketing year that just ended, Unica said on April 19 that Brazilian sugar output rose +25.7% y/y to 42.425 MMT.
Record heat in Thailand that may damage the country's sugarcane crops is bullish for sugar prices. On May 6, Thailand's Meteorological Department said that more than three dozen of Thailand's 77 provinces posted record-high temperatures in April, with new highs beating records as far back as 1958. Sugar millers in Thailand are reporting the lowest yield from crushed cane this year in at least 13 years. However, Thailand's government on April 22 estimated that Thailand's 2023/24 sugar production from Dec-Apr 17 was 8.77 MMT, above a Feb estimate from the Thai Sugar Millers Corp for sugar production of 7.5 MMT. Thailand is the world's third-largest sugar producer and the second-largest sugar exporter.
In support of sugar prices, the International Sugar Organization (ISO) on June 10 raised its global 2023/24 sugar deficit estimate to -2.95 MMT from a February estimate of -689,000 MT. ISO also raised its global 2023/24 sugar demand estimate to 182.2 MMT from 180.4 MMT, citing upward revisions to India's consumption figures.
The USDA, in its bi-annual report released on May 23, projected that global 2024/25 sugar production would climb +1.4% y/y to a record 186.024 MMT and that global 2024/25 human sugar consumption would increase +0.8% y/y to a record 178.788 MMT. The USDA forecasted that 2024/25 global sugar ending stocks would fall -4.7% y/y to a 13-year low of 38.339 MMT.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
