July NY world sugar #11 (SBN24) this morning is down -0.19 (-1.01%), and Aug London ICE white sugar #5 (SWQ24) is down -8.80 (-1.59%).

Sugar prices this morning are moderately lower but remain above Tuesday’s major lows.  Ramped-up sugar production in Brazil is undercutting prices.  Unica reported today that Brazil’s sugar production in the second half of April jumped +84.0% y/y to 1,843 MMT, and for the 2024/25 marketing year (Apr-Mar) sugar production rose +65.9% y/y to 2.558 MMT.  Brazil’s sugar mills have boosted their cane crushing for sugar at the expense of ethanol production as they crushed 46.96% of sugarcane this year for sugar, up from 41.42% of cane used last year.  For the 2023/24 marketing year that just ended, Unica reported on April 19 that Brazilian sugar output rose +25.7% y/y at 42.425 MMT.

NY sugar on Tuesday posted a 1-1/2 year nearest-futures low, and London sugar dropped to a 1-1/4 year low.  An easing of global sugar supply concerns is weighing on sugar prices.  Last Thursday, Datagro raised its 2024 Center-South sugar production estimate to 41.6 MMT from a March estimate of 40.45 MMT.  

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 bearish factor for sugar prices, India’s Meteorological Department expects the 2024 (Jun-Sep) monsoon period to be 106% of a long-term average of 87 centimeters, which could boost India’s sugar output.  By contrast, the 2023 (Jun-Sep) monsoon rain was 6% below average, the poorest monsoon rainfall in 5 years.  

In a bullish factor, the Indian Sugar and Bioenergy Manufacturers Association reported Monday 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.

In October, India extended restrictions on sugar exports from October 31 until further notice in an attempt 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.  Last Monday, 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.

NOAA predicts the recent El Nino weather event will end this month, and the tropical Pacific will transition to neutral conditions, which should benefit weather patterns in South America and Asia and boost global sugar crops.  

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.

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