Sugar prices Thursday posted moderate gains. Smaller sugar output in Brazil supported gains in prices after Thursday’s data from Unica showed Brazil’s 2022/23 Center-South sugar production in the first half of April fell -80% y/y to 127,000 MT.
A more than 2% rally in crude prices (CLM22) Thursday to a 1-week high was another bullish factor for sugar prices. Higher crude prices benefit ethanol prices and could prompt Brazil’s sugar mills to divert more cane crushing to ethanol production rather than sugar, thus curbing sugar supplies.
A bearish factor for sugar was Wednesday’s projection from Conab for Brazil 2022/23 sugar production to increase by +15% y/y to 40.3 MMT as the crop recovers from the past season’s adverse weather.
A negative factor for sugar was last Friday’s report from the USDA’s FAS that projected Brazil’s 2022/23 sugar production would climb +2.9% y/y to 36.37 MMT and that 2022/23 Brazil sugar exports would increase by +3.7% y/y to 26.6 MMT.
Sugar prices were undercut last Wednesday when Brazil’s crop agency, Conab, raised its Brazil 2021/22 sugar production estimate to 35 MMT from a Nov estimate of 33.9 MMT.
The outlook for larger sugar crop sizes in India and Thailand to offset reduced sugar production in Brazil is bearish for prices. On April 15, the Indian Sugar Mills Association (ISMA) raised India’s 2021/22 sugar production estimate to 35 MMT from 33.3 MMT, up +12.2% y/y, and said sugar exports would jump to a record 9 MMT. India is the world’s second-largest sugar producer.
Also, the Thailand Office of the Cane & Sugar Board reported on March 22 that Thailand’s 2021/22 sugar production from Dec 7-Mar 19 was at 9.6 MMT, and the total Thailand 2021/222 sugar harvest Dec 7-Mar 31 may reach 10 MMT, a 3-year high. As a result, the Thailand Office of the Cane & Sugar Board expects Thailand to export 7 MMT of sugar this (2021/22) marketing year. Thailand is the world’s second-largest sugar exporter.
In a bullish factor, the International Sugar Organization (ISO) recently cut its global 2021/22 sugar deficit estimate to -1.93 MMT from a November estimate of -2.55 MMT.
