India is the largest sugar producer in the world and the Asian nation ranks second behind Brazil in terms of sugar exports.
Sugar Price Trends Witnessed
On 1st of March, 2023 , the price of sugar surged sharply, with the May NY sugar recording a contract high. Prices will rise as there are indications of limited global sugar supplies. The March 2023 ICE sugar contract, which expired on 28th February 2023, was settled with the delivery of 11, 551 contracts, or about 587,000 MT of sugar. That was the smallest March sugar contract settlement since 2013 and fell far short of the 1.34 MMT required to settle the March 2022 ICE sugar contract, indicating tight supplies. On the 1st of March, May London White Sugar #5 (SWK23) closed at +13.50 (+2.40%), and May NY World Sugar #11 (SBK23) closed at +0.50 (+2.49%).
Rise In Sugar Prices
On 28th February 23, near-futures (H23) sugar prices rose to a 6-year high due to indications of tighter global supplies. The International Sugar Organization (ISO) updated its estimates for the world’s sugar surplus and deficit on the 24th of February 2023. The ISO reduced its estimate for the world’s sugar surplus for 2022–2023 from 6.19 MMT to 4.15 MMT and raised its 2021-22 global sugar deficit estimate to -2.23 MMT from a prior estimate of -1.67. However, the ISO continues to forecast that global sugar production will increase +4.8% year over year to a record high of 180.4 MMT in 2022–23.
Factors Influencing Prices Of Sugar
Sugar prices have also been affected since India announced on 17th February that it would only export the 6.1 MMT of sugar which it has permitted this season. The government decided against allowing additional exports because of worry over the issue that a smaller Indian sugar crop could restrict domestic supplies this year. However, the Indian Sugar Mills Association (ISMA) reported that from October 2022 to 15th of February 2023, India’s sugar output increased +2.8% year over year to 22.84 MMT. An underlying factor driving up the price of sugar is concern over declining global sugar production. On January 31, the ISMA reduced its forecast for India’s sugar production in 2022–2023 from 36.5 MMT to 34 MMT and its forecast for India’s sugar exports in 2022–2023 from 9 MMT to 6.1 MMT (The previous estimates were made in October 2022). Additionally, according to the ISMA, India’s sugar mills will divert 4.5–5.0 MMT of sugar to ethanol production in 2022–2023.
Another factor bringing an incline in sugar prices is a reduced sugar production in Europe as the European Association of Sugar Manufacturers forecasted on 8th December’ 22 that the EU 2022-23 sugar output would witness a decline of -7% year-on-year to 15.5 MMT.
UNICA reported on Monday that Brazil’s 2022–23 sugar production through mid–February increased +4.5% y/y to 33.503 MMT, which has brought down prices given the country’s strong sugar output.
The Thai Sugar Mills Corp’s prediction on 1st February 2023 that Thailand’s sugar production would increase +14% y/y to 11.55 MMT in 2022–23 has also brought down sugar prices. Thailand’s Sugar Exports are also anticipated to rise +17% y/y to 9.05 MMT in 2022–23. According to Green Pool Commodity Specialists, Thailand’s 2023 sugar production as of 8th February 2023 was 6.59 MMT, up nearly +10% from the previous season, with a record-high sugar content in the cane crop.
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