Sugar Posts Moderate Gains as India Maintains Sugar Export Restrictions

Sugar - pyramid-formed-with-sugar

July NY world sugar #11 (SBN24) on Monday closed up +0.44 (+2.32%), and Aug London ICE white sugar #5 (SWQ24) closed up +11.90 (+2.13%).

Sugar prices Monday posted moderate gains, with NY sugar climbing to a 1-week high and London sugar rising to a 6-week high.  Sugar rallied Monday on the outlook for India to keep its sugar export restrictions in place after the Indian government said there is no proposal to review its sugar export restrictions.  Below-normal monsoon rain in India is also bullish for sugar prices after the Indian Meteorological Department reported last Friday that India received 64.5 mm of rain over the first 18 days of June, compared with the long-term average of 80.6 mm.  

Increased sugar output in Brazil is bearish for prices.  Unica reported on June 14 that Brazil's sugar production for the 2024/25 crop year through May was up +11.8% y/y at 7.837 MMT.  Also, the percentage of Brazil's 2024/25 sugar cane crop crushed for sugar rose to 47.88% from 46.68% last year.

Another supportive factor for sugar was the action by the International Sugar Organization (ISO) on June 10 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.

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 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.  

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.

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.