Sugar is one of the most consumed agro-commodity across the world. Sweetener is used widely in different parts of the world. In Asian nations, sugar is used for making tea and coffee, while in Germany, France, Italy, and the UK it is used in bakeries.
Thus, the demand for sugar remains high all around the world. Initially, it was estimated that due to low sugar and cane production, the export prices of sugar would be high. But as per the report, sugar prices fell back on Monday due to increased sugar output and high sugar content in cane in Thailand.
As per the data of the World Trade Organization (WTO), Thailand is the second largest exporter of sugar in the world. Brazil being at the top of the Sugar Export list. Thailand generally exports sugar to Southeast Asian countries. The major countries importing sugar from Thailand are Indonesia, Cambodia, Vietnam, Chinese Taipei, and South Korea. The sugar and cane industry generally contributes around 300 billion baht to the economy of the country every marketing year.
Thailand Witnesses An Increase In Sugar Output As per the general trend, the prices of agro-commodity would increase if the production is low due to any reason be it weather conditions, war, or any other environmental, political, or socio-economic factor, and vice-versa.
On Monday, the selling price of sugar closed slightly lower owing to the elevated sugar output from Thailand.
According to the Green Pool Commodity Specialists, the sugar output from Thailand on 8th February 2023, reached 6.59 MMT i.e. up by approximately 10% as compared to the previous season, with sugar concentration in the sugarcane harvest at a record high. As it is already stated that Thailand is the second largest sugar exporting country in the world, the sugar rates were already at the defensive side. Last Friday, Unica revealed that in January 2022-23, Brazil’s sugar production increased by +4.5% year on year to 33.500 MMT. As both the major sugar-producing and exporting countries generated high amounts of sugar, the prices declined.
Sugar prices have risen dramatically in recent months due to concerns about reduced global sugar output, with New York sugar reaching a 6-1/2 nearest-futures high last Friday.
Estimated Sugar Production in 2022-23
India is the world’s second-largest producer of sugar. On January 31st, the Indian Sugar Mills Association (ISMA) reduced its India sugar production estimate 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 production in 2022/23.
The surge in sugar prices is supported by reduced sugar output in Europe. On December 8, the European Association of Sugar Manufacturers predicted that EU sugar harvest in 2022/23 will decline -7% year on year to 15.5 MMT.
Last Thursday’s data of Indian Sugar Mills Association (ISMA), indicated India’s 2022/23 sugar production from October to January was up +3.4% year on year at 19.35 MMT, which was a negative reason for sugar. In addition, the Thai Sugar Mills Corp forecasted on February 1 that Thailand’s sugar production in 2022/23 will surge 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.
As per the calculation of International Sugar Organization (ISO), the global sugar production in 2022-23 would spike up to 15.5% year on year to a record high of 182.1 MMT. Furthermore, ISO also estimated a +6.2 MMT surplus in global sugar harvest in the current marketing year 2022-23.
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