October NY world sugar #11 (SBV24) on Monday closed up +0.65 (+3.53%). Oct London ICE white sugar #5 (SWV24) did not trade Monday, with markets in the UK closed for a bank holiday.
NY sugar today jumped to a 3-week high as massive fires caused by drought and excessive heat damaged some sugar crops in Brazil's top sugar-producing state of Sao Paulo. Sugar cane industry group Orplana said there were as many as 2,000 fire outbreaks over the past weekend that affected as much as 60,000 hectares of planted sugarcane in Sao Paulo. Green Pool Commodity Specialists said that as much as 5 MMT of sugar cane may have been lost due to the fires.
Sugar prices have risen sharply since last Thursday when Conab, Brazil's government crop forecasting agency, cut its 2024/25 Brazil Center South sugar production estimate to 42 MMT from a previous forecast of 42.7 MMT, citing lower sugarcane yields due to drought and excessive heat. Separately, in the 2024/25 marketing year through July, Brazil's Center-South sugar production was up by +8% y/y at 20.753 MMT, according to a Unica report on August 13.
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 Monday that India received 632.5 mm of rain during the current monsoon season as of August 19, 3% more than the comparable long-term average of 611.8 mm. India's monsoon season runs from June through September.
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. On August 8, 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.
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.
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.
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.
