Sugar Prices Close Higher On Signs Of Solid Sugar Demand

As sugar is a highly consumed product across the world its demand is ever increasing. Brazil, Thailand, India are the major sugar producing countries.

Sugar is one of the most consumed agro-commodity around the world. The production of sugar and the content of sugar in sugarcane determines the market price of sugar worldwide. 

Due to high demand for sugar in the market, the export price boosted up last tuesday. On Tuesday, May New York sugar #11(SBK23) closed up at +0.32 (+1.63%) whereas, white sugar May London #5(SWK23) closed up at +10.70 (+1.91%). 

The market selling price of sugar was moderately high on Tuesday. This spike is observed due to the solid physical demand of sugar. On Monday, supplies of London sugar on the expiring March 2023 contract were a 4-year low of 191 MT (compared to 359 MT for the March 2022 contract), indicating robust physical sugar demand as less sugar was dumped into sugar futures deliveries. 

High Sugar Prices 

The rise in Thailand’s Sugar Production is a negative factor for Sugar. According to the Green Pool Commodity Specialists, by February 8, 2022-23, Thailand’s sugar production touched 6.59 MMT which is nearly up by 10% from the past season, with high sugar concentration in the sugarcane harvest. 

Brazil is the leading producer of sugar across the globe. Last Friday, Unica stated that Brazil’s 2022-23 sugar production in the month of January increased +4.5% year on year to 33.500 MMT, which is bearish for prices. 

Sugar Export Data Of 2022-2023 

Sugar prices have risen dramatically in recent months due to concerns about reduced global sugar output, with NY sugar reaching a 6-¼ nearest-futures peak past Friday. On January 31, the Indian Sugar Mills Association (ISMA) reduced its India sugar production forecast for 2022/23 to 34 MMT from 36.5 MMT in October, and reduced its India sugar export projection to 6.1 MMT from 9 MMT in October. Furthermore, the ISMA predicts that India’s sugar mills would divert 4.5-5.0 MMT of sugar to ethanol synthesis in 2022/23. India is the world’s second-largest producer of sugar. 

Sugar prices are supported by lower sugar output in Europe. On December 8, the European Association of Sugar Manufacturers predicted that EU sugar output in 2022-23 will decline -7% year on year to 15.5 MMT. 

Last Thursday’s data from the Indian Sugar Mills Association (ISMA), indicated India’s 2022-23 sugar output from October to January was up +3.4% year on year at 19.35 MMT, which was a bearish factor for sugar. In addition, Thai Sugar Mills Corp forecasted on February 1 that Thailand’s sugar production in 2022-2023 will increase by 14% year on year to 11.55 MMT. Similarly, Thailand’s sugar exports are expected to expand +17% year on year to 9.05 MMT in 2022-23.

The International Sugar Organization (ISO) forecasted on November 22 that worldwide sugar output in 2022-23 will rise +5.5% year on year to a record peak of 182.1 MMT. Furthermore, ISO forecasted a +6.2 MMT oversupply in the international sugar market in 2022/23. 

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