July NY world sugar #11 (SBN24) fell by -0.46 (-2.37%) today, while August London ICE white sugar #5 (SWQ24) dropped by -13.70 (-2.44%). This decline is attributed to optimism surrounding robust sugar production in Brazil, the world’s leading sugar producer.
Data from Unica revealed that Brazil’s sugar production for the 2024/25 crop year up to May increased by 11.8% year-over-year, reaching 7.837 million metric tons (MMT). Additionally, the proportion of Brazil’s 2024/25 sugar cane crop processed into sugar rose to 47.88%, up from 46.68% last year.
For the recently concluded 2023/24 marketing year, Unica reported on April 19 that Brazilian sugar output surged by 25.7% year-over-year to 42.425 MMT. Furthermore, Brazil’s crop agency Conab projected on April 25 that the country’s 2024/25 sugar production would grow by 1.3% year-over-year to a record 46.292 MMT, with sugar acreage expanding by 4.1% to 8.7 million hectares, the highest in seven years.
Last Thursday, sugar prices hit one-month highs amid concerns over reduced sugar exports from India. The Indian government reiterated its commitment to boosting ethanol blending with gasoline, which could diminish sugar production and export availability, thereby tightening global supplies.
Another factor supporting sugar prices was the International Sugar Organization’s (ISO) recent revision of the global 2023/24 sugar deficit estimate to -2.95 MMT, up from -689,000 MT in February. The ISO also increased its global sugar demand estimate for 2023/24 to 182.2 MMT from 180.4 MMT, reflecting higher consumption projections for India.
Adding to the bullish sentiment, the Indian Sugar and Bioenergy Manufacturers Association reported on May 13 that India’s sugar production from October to April fell by 1.6% year-over-year to 31.4 MMT, as more sugar mills ceased operations for the season. By April 30, 516 Indian sugar mills had closed, compared to 460 at the same time last year.
India’s Meteorological Department announced on May 30 that the monsoon rains had arrived in southern India slightly ahead of schedule, which should benefit the country’s sugar crop. The department also forecasted a 2024 monsoon period with rainfall 106% of the long-term average, significantly better than the previous year’s below-average rainfall.
India has extended its sugar export restrictions from October 31 until further notice to ensure adequate domestic supplies. During the 2022/23 season, India permitted the export of only 6.1 MMT of sugar, down from a record 11.1 MMT the previous season. India is the world’s second-largest sugar producer.
Record heat in Thailand poses a bullish factor for sugar prices due to potential damage to the country’s sugarcane crops. On May 6, Thailand’s Meteorological Department reported record-high temperatures in over three dozen provinces, with new records dating back to 1958. Additionally, below-average rainfall and the ongoing El Niño weather pattern could further reduce rainfall. Thai sugar millers are experiencing the lowest yield from crushed cane in at least 13 years. However, Thailand’s government estimated on April 22 that 2023/24 sugar production from December to April 17 was 8.77 MMT, exceeding the Thai Sugar Millers Corp’s February estimate of 7.5 MMT. Thailand ranks as the world’s third-largest sugar producer and the second-largest sugar exporter.
In its bi-annual report released on November 23, the USDA projected global 2023/24 sugar production to rise by 4.7% year-over-year to a record 183.461 MMT, while global human sugar consumption would increase by 1.2% to a record 178.431 MMT. The USDA also forecasted a 13.3% year-over-year decline in global sugar ending stocks, reaching a 13-year low of 33.681 MMT. The ISO, on February 28, adjusted its global sugar deficit estimate for 2023/24 to -689,000 MT, up from -335,000 MT in November.
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