VOT Research Desk
Market Analytics and Technical Considerations
Friday saw gains of +0.32 (+1.62%) for March NY world sugar #11 (SBH23) and +9.90 (+1.86%) for March London white sugar #5.
After rumors circulating that several Indian sugar mills had broken contracts, forcing buyers to offset positions in the trading account, sugar prices spiked on Friday due to ongoing concerns over Asian sugar supplies. Additionally, the Indian Sugar Mills Association reported this week that from October 1 to November 15, sugar output in India decreased by -4.3% year over year, indicating production difficulties. sugar cost The news that rain in Thailand has postponed the harvest by approximately two weeks helped on Friday as well.
Price of sugar Friday were capable of overcoming negative aspects including general concerns about global commodity consumption and the total 8% decline in Dec WTI crude oil prices observed on Thursday and Friday. Lower oil prices drive down ethanol costs and may lead Brazil’s sugar mills to shift more cane crushing toward sugarcane production instead of ethanol, increasing sugar availability.
The fact that Brazil’s Center-South sugar output in the 2022–23 marketing year through October was down -3.1% y/y to 30.281 MMT has supported sugar prices since the last Thursday, according to a study from Unica.
India’s increased sugar production is negative for pricing. On October 24, the Indian Sugar Mills Union predicted that as Indian farmers increased their cultivated cane area by +5.4% y/y to 5.6 million hectares, India’s 2022/23 sugar production (from October 1 to September 30) will rise +2% y/y to 36.5 MMT. India produced 35.8 MMT more sugar in 2021/22, a +2.9% year-over-year increase. India ranks as the second-largest producer of sugar in the world. Strong sugar exports from India, which increased +57% y/y to a record 11 MMT in 2021/22, are also negative for prices.
The International Sugar Organization (ISO) forecasted on Tuesday that worldwide sugar production will rise +5.5% y/y to a record level of 182.1 MMT in 2022–23, which is a bearish element. Additionally, ISO predicted that there will be a +6.2 MMT excess in the world sugar market in 2022–2023.
