Market Considerations and Analytics

Key Notes

Thursday, March NY world sugar #11 (SBH23) and March London white sugar #5 (SWH23) both saw gains of +3.50 and +0.20, respectively.

On Thursday, sugar prices experienced modest gains. European food and sugar manufacturers may be forced to import sugar as a result of signs of a decline in European production, reducing global supplies. The European Association of Sugar Manufacturers predicted that EU sugar production in 2022/23 would decrease by -7 percent annually to 15.5 MMT.

Gains in sugar are constrained by crude oil’s weakness. Crude prices (CLF23) fell to their lowest level in one year on Thursday, which reduces the price of ethanol and may cause Brazil’s sugar mills to shift more cane crushing toward sugar production rather than ethanol production, increasing sugar supplies.

StoneX raised its global 2022–23 sugar surplus estimate from 3.9 MMT in September to 5.2 MMT on Thursday, lowering sugar prices. StoneX also projects that Brazil’s Center South sugar production will increase by 5.2% annually to 35.6 MMT in 2023/24.

Unica reported on November 25 that Brazil’s Center-South sugar output in the 2022/23 marketing year through mid-November increased by +0.3% y/y to 31.966 MMT, which is bearish for prices. Additionally, the Organization of Cane Producers Association in Brazil predicted on Monday that favorable weather would result in a sugar production of 36.9 million metric tons in 2022/23 and a production of 37.2 million metric tons in 2023/24.

Higher sugar yield in India is negative at costs. As Indian farmers increased their planted cane acreage by +5.4% y/y to 5.6 million hectares, the India Sugar Mills Association (ISMA) made a prediction on October 24 that India’s 2022/23 sugar production (Oct 1-Sep 30) would increase by +2% y/y to 36.5 MMT. India’s sugar production increased to 35.8 MMT in 2021/22 by 2.9% annually.

Also, strong sugar exports from India are hurting prices because India’s sugar exports in 2021/22 increased by 57% year-over-year to a record 11 MMT. India’s October-November sugar production increased by +1.5% year-over-year to 4.79 MMT, as reported by ISMA on Friday.

The International Sugar Organization (ISO) predicted on November 22 that global sugar production in 2022–2023 would reach a record high of 182.1 MMT, a bearish factor. Additionally, ISO predicted a surplus of +6.2 MMT on the global sugar market in 2022/23.

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