Higher forecasts for global production could push sugar prices lower

The International Sugar Organization (ISO) has released its forecast for global sugar production Wirtschaftsjahr 2023/24 of 174,8 million Tonnen to 179,9 million tonnes and lowered its sugar deficit forecast from 2,1 million tonnes to 335.000 tonnes. However, prices have so far not responded to the delays in deliveries from Brazil, which are due to the congestion of the country's ports Soybean and Corn are attributable.

It should be recalled that sugar prices have reached a 12-year high worldwide against the backdrop of a possible reduction in supply as a result of the El Niño weather phenomenon. March futures for No. 5 white sugar on the London Stock Exchange fell 0,3% to 735 USD/Tonne (+2% for the month, +53% for the year) and for Sugar No. 11 (cane sugar) in New York - up 0,4% to $27,2/lb or $600/ton (-1% for the month, +38% for the year).

According to data from Unica, Brazilian sugar production rose 2022% year-on-year to 23 million tonnes in the 22,6/37,215 marketing year, including a 9,4% increase in October. While 45,83% of sugar cane went into sugar production last year, in 2022/23 it will already be 49,39%. The experts at Green Pool Commodity have raised the forecast for Brazilian sugar production in 2023/24 by 0,5 million tons to a record level of 40,5 million tons. However, sugar exports from Brazil fell 10% in October compared to September, due to port congestion.

Thai Sugar Millers Corp. expects Thai sugar production to fall 2023% from the previous season to a 24-year low of 36 million tonnes in the 17/7 marketing year due to a severe drought, supporting global prices. The government of the country, the world's third largest sugar producer and second largest sugar exporter, has announced that it Sugar will declare it a commodity to curb inflation and support food security, prompting the Regulatory Commission to control sugar exports.

India, the world's second-largest sugar producer, has started sugarcane harvesting but the crop forecast for the 2023/24 marketing year has been revised downwards due to the lowest monsoon rainfall in five years, which was 6% below normal in the June-September period. The country's authorities plan to limit sugar exports, but the decision will only be made after actual production estimates are available. In the 2022/23 marketing year, the government approved only 6,1 million tonnes of sugar for export, compared to a record 11,1 million tonnes in the 2021/22 season.

Ukraine is increasing its sugar exports amid increasing global demand, shipping 76.000 tons in October (up from 25.000 tons in September and 30.000 tons in October 2022), the highest in a calendar month in recent years. Before that, the record was 70.000 tons of sugar in May 2023.

The El Niño weather phenomenon typically brings heavy rains in Brazil and drought in India, which negatively impacts sugar production. The resulting drought in Asia in 2015 and 2016 led to a sharp increase in prices.

Source: Ukragroconsult (Ukraine)

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