March 9, 2022
Barchart | https://bit.ly/3CDogjx
May NY world sugar #11 (SBK22) on Wednesday closed down -0.49 (-2.52%), and May London white sugar #5 (SWK22) closed down -10.20 (-1.90%).
Sugar prices Wednesday posted moderate losses due to a plunge of more than -12% in crude oil prices (CLJ22). Lower crude oil prices undercut ethanol prices, which encourages Brazil's sugar mills to divert less cane crushing to ethanol than sugar, thus boosting sugar supplies.
Another bearish factor for sugar was Wednesday's projection from StoneX that Brazil 2022/23 sugar production will climb +7.5% y/y to 34.5 MMT as regular precipitation has aided sugarcane yields.
In a bullish factor, the International Sugar Organization (ISO) recently cut its global 2021/22 sugar deficit estimate to -1.93 MMT from a November estimate of -2.55 MMT.
A negative factor for sugar is the outlook that larger sugar crop sizes in India and Thailand will offset reduced sugar production in Brazil. Last Friday, the Indian Sugar Mills Association (ISMA) raised its India 2021/22 sugar production estimate to 33.3 MMT from a Jan estimate of 31.5 MMT and predicted India's 2021/22 sugar exports would jump to a record 7.5 MMT. India is the world's second-largest sugar producer.
Also, the Thailand Office of the Cane & Sugar Board reported Jan 10 that Thailand 2021/22 sugar production during Dec 7-Jan 6 rose +58% y/y to 1.9 MMT. Thailand is the world's second-largest sugar exporter.
Reduced sugar output in Brazil is bullish for prices after Unica reported Jan 12 that 2021/22 Center-South sugar production Oct through Dec was 32.029 MMT, down -16.14% y/y. Also, the sugar content in the sugarcane crushed fell -1.55 y/y to 142.92 kg/ton from 145.17 kg/ton a year earlier.
Sugar has underlying support from the recent damage to Brazil's sugar crops from frost and drought. Conab, on Nov 23, cut its Brazil 2021/22 sugar production estimate to 33.9 MMT from an Aug forecast of 36.9 MMT, down -17.9% y/y. Conab projects Brazil's 2021/22 sugarcane crushing will fall to 525 MMT, down -13% y/y and the lowest in 10 years.