Sugar Prices Finish Lower as Supply Concerns Ease

October NY world sugar #11 (SBV24) on Tuesday closed down -0.51 (-2.53%), and Aug London ICE white sugar #5 (SWQ24) closed down -7.00 (-1.25%).

Sugar prices Tuesday fell sharply, with NY sugar posting a 1-1/2 week low and London sugar posting a 2-1/2 week low.  Above-normal monsoon rain in India may boost sugar output and is a bearish factor for sugar prices.  The Indian Meteorological Department reported Monday that India received 225.7 mm of rain during the current monsoon season as of July 7, up +2% from the comparable long-term average of 221.6 mm.

Robust sugar output in Brazil is bearish for prices after Unica reported on June 28 that Brazil's sugar production for the 2024/25 crop year through the first half of June was up +14.4% y/y at 10.95 MMT.  Also, the percentage of Brazil's 2024/25 sugar cane crop crushed for sugar rose to 48.38% from 47.24% last year.  Conab, Brazil's crop agency, projected on April 25 that Brazil's sugar production for the overall 2024/25 marketing year will climb +1.3% y/y to a record 46.292 MMT as 2024/25 sugar acreage in Brazil increases by +4.1% to 8.7 million hectares (21.5 million acres), the most in seven years.  For the 2023/24 marketing year that just ended, Unica said on April 19 that Brazilian sugar output rose +25.7% y/y to 42.425 MMT.

Sugar prices were undercut after the Indian Sugar and Bio-energy Manufacturers Association (ISM) on July 3 reported India's 2023/24 sugar reserves at 9.1 MMT and reported a surplus of 3.6 MMT.  The group also urged the government to allow increased exports of surplus sugar.  India has restricted sugar exports since October 2023 to maintain adequate domestic supplies.  India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season to September 30 after allowing exports of a record 11.1 MMT in the previous season.  India is the second-largest sugar producer in the world.  Separately, the Indian Sugar and Bioenergy Manufacturers Association reported on May 13 that India's 2023/24 sugar production from Oct-Apr fell -1.6% y/y to 31.4 MMT.

Record heat in Thailand that may damage the country's sugarcane crops is bullish for sugar prices.  On May 6, Thailand's Meteorological Department said that more than three dozen of Thailand's 77 provinces posted record-high temperatures in April, with new highs beating records as far back as 1958.  Sugar millers in Thailand are reporting the lowest yield from crushed cane this year in at least 13 years.  However, Thailand's government on April 22 estimated that Thailand's 2023/24 sugar production from Dec-Apr 17 was 8.77 MMT, above a Feb estimate from the Thai Sugar Millers Corp for sugar production of 7.5 MMT.  Thailand is the world's third-largest sugar producer and the second-largest sugar exporter.  

In a supportive factor for sugar prices, the International Sugar Organization (ISO) on June 10 raised its global 2023/24 sugar deficit estimate to -2.95 MMT from a February estimate of -689,000 MT.  ISO also raised its global 2023/24 sugar demand estimate to 182.2 MMT from 180.4 MMT, citing upward revisions to India's consumption figures.

The USDA, in its bi-annual report released on May 23, projected that global 2024/25 sugar production would climb +1.4% y/y to a record 186.024 MMT and that global 2024/25 human sugar consumption would increase +0.8% y/y to a record 178.788 MMT.  The USDA forecasted that 2024/25 global sugar ending stocks would fall -4.7% y/y to a 13-year low of 38.339 MMT.  
 

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