Brazil continues to be the largest producer and exporter of sugar followed by India and Thailand.
Sugar Pricing
On 15th February’ 2023, May NY world sugar number 11 (SBK23) closed lower by -0.28 (-1.40%), and May London white sugar number 5 (SWK23) closed lower by -3.70 (-0.65%). The sugar prices on the 15th posted moderate losses due to an increase in the dollar index to a 1-¼ month high which sparked a long liquidation in sugar futures.
Concern over reduced global Sugar Production has driven a sharp rise in sugar prices over the past month, with NY sugar posting a 6-1/4 nearest-futures high on 10th February.
Reasons
An increase in Thailand’s sugar production is another factor that is bearish for sugar. As per Green Pool Commodity Specialists on the 13th of February, Thailand’s sugar production for 2023 reached 6.59 million metric tonnes (MMT) by 8th of February, an increase of almost 10% from the previous season and record-high sugar content in the cane crop.
A strong sugar output by the world’s largest producer, Brazil, proved barish for prices as Unica reported on the 10th of February that the country’s 2022/23 sugar production through January rose by 4.5% y/y to 33.500 MMT.
Also, the Thai Sugar Mills Corp on Feb 1 projected Thailand’s 2022/23 sugar production would climb +14% y/y to 11.55 MMT. Likewise, Thailand’s 2022/23 sugar exports are projected to increase +17% y/y to 9.05 MMT. In a bearish factor, the International Sugar Organization (ISO) on Nov 22 projected that global 2022/23 sugar production would climb +5.5% y/y to a record high of 182.1 MMT. Also, ISO projected that the 2022/23 global sugar market would be in a surplus of +6.2 MMT.
Situation In India
On January 31, the Indian Sugar Mills Association (ISMA) reduced its estimates for India’s sugar production in 2022–2023 from an earlier estimate of 36.5 MMT to 34 MMT and for the country’s sugar exports in 2022–2023 from an earlier forecast of 9 MMT to 6.1 MMT. In addition, the ISMA predicted that by 2022 or 2023, sugar mills in India will divert 4.5 to 5.0 MMT of sugar to ethanol production. India is the second-largest producer of sugar in the world. The Indian Sugar Mills Association (ISMA) report from the 9th of February, which showed that India’s sugar production from October to January of 2022/23 was up +3.4% y/y at 19.35 MMT, was a bearish factor for sugar.
Sugar prices are boosted by the decline in sugar production in Europe. On 8th December, the European Association of Sugar Manufacturers predicted that EU sugar production would decrease -7% year over year to 15.5 MMT in 2022–23.
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