October NY world sugar #11 (SBV24) on Friday closed up +0.15 (+0.84%), and Oct London ICE white sugar #5 (SWV24) closed up +3.40 (+0.66%).
Sugar prices Friday rose moderately on strength in the Brazilian real (^USDBRL). The real is trading just below Wednesday's 4-week high against the dollar, discouraging export selling from Brazil's sugar producers.
Sugar prices this past week have consolidated above recent significant lows. NY sugar posted a 1-3/4 year nearest-futures low last Monday, and London sugar dropped to a 2-1/3 year low. Over the past month, sugar prices have been under pressure from signs of larger global supplies. On Tuesday, Unica reported that Brazil's Center-South sugar production in the marketing year through July was up by +8% y/y at 20.753 MMT.
Optimism that above-average monsoon rains in India will lead to a bumper sugar crop is a bearish factor for sugar prices. The Indian Meteorological Department reported Sunday that India received 579.7 mm of rain during the current monsoon season as of August 11, 7% more than the comparable long-term average of 481.9 mm. India's monsoon season runs from June through September.
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.
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. 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. Last Thursday, the ISM said it would maintain its curbs on sugar exports to ensure adequate domestic supplies and boost India's ethanol output. Separately, the ISM reported on May 13 that India's 2023/24 sugar production from Oct-Apr fell -1.6% y/y to 31.4 MMT. Also, the ISM on July 30 projected India's 2024/25 sugar production would fall by -2% y/y to 33.31 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 a supportive factor for 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.
