July NY world sugar #11 (SBN24) today is up +0.38 (+1.99%), and Aug London ICE white sugar #5 (SWQ24) is up +11.40 (+2.05%).
Sugar prices today climbed to 1-month highs on expectations for fewer sugar exports from India. The Indian government said today that it remains committed to increasing ethanol blending with gasoline. An increase in India's ethanol output could reduce the country’s sugar production and leave less sugar available to export, thus reducing global supplies.
Another supportive factor for sugar was Monday's action by the International Sugar Organization (ISO) to raise its global 2023/24 sugar deficit estimate to -2.95 MMT from a February estimate of -689,000 MT. The 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.
Gains in sugar were limited due to weakness in the Brazilian real ([^USDBRL](https://www.barchart.com/forex/quotes/%5EUSDBRL/overview)), which tumbled to a 17-month low Wednesday against the dollar. The weaker real encourages export selling by Brazil's sugar producers.
Ramped-up sugar production in Brazil is negative for prices. Unica reported on May 31 that Brazil's sugar production in the first half of May rose by +1.0% y/y to 2.567 MMT from 2.542 MMT a year earlier. For the 2024/25 crop year through mid-May, sugar production rose +25.7% y/y to 5.135 MMT.
For the 2023/24 marketing year that just ended, Unica reported on April 19 that Brazilian sugar output rose +25.7% y/y to 42.425 MMT. Meanwhile, Conab, Brazil's crop agency, projected on April 25 that Brazil's 2024/25 sugar production 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.
In a bullish factor, 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 as more sugar mills closed for the year and ended their sugarcane crush. As of April 30, 516 Indian sugar mills had closed operations compared with 460 mills that closed at the same time last year.
India's Meteorological Department said on May 30 that the monsoon rains have arrived in southern India slightly earlier than the normal date of June 1. The rain should improve the prospects for India's sugar crop. Also, India's Meteorological Department recently said it expects the 2024 (Jun-Sep) monsoon period to be 106% of a long-term average of 87 centimeters, much better than the 2023 (Jun-Sep) monsoon season of 6% below average and the least rainfall in 5 years.
India extended restrictions on sugar exports from October 31 until further notice 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. India is the second-largest sugar producer in the world.
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. Also, rainfall in Thailand has been below the same period last year, and the current El Nino weather system could continue to depress rainfall in Thailand. Sugar millers in Thailand are reporting the lowest yield from crushed cane this year in at least 13 years. Thailand is the world's third-largest sugar producer and the second-largest sugar exporter. 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.
The USDA, in its bi-annual report released on November 23, projected that global 2023/24 sugar production would climb +4.7% y/y to a record 183.461 MMT and that global 2023/24 human sugar consumption would increase +1.2% y/y to a record 178.431 MMT. The USDA also forecasted that 2023/24 global sugar ending stocks would fall -13.3% y/y to a 13-year low of 33.681 MMT. The International Sugar Organization (ISO) on February 28 raised its 2023/24 global sugar deficit estimate to -689,000 MT from a November estimate of -335,000 MT.
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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.
