May 2, 2022
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Sugar prices Monday dropped to a 6-week low and settled moderately lower. Weakness in the Brazilian real (^USDBRL) weighed on sugar prices Monday after the real tumbled to a 6-week low against the dollar. A weaker real encourages export selling from Brazil's sugar exporters.
Sugar prices were already on the defensive from last Friday when Green Pool Commodity Specialists shifted its projection for the 2022/23 global sugar market to be in surplus by +1.41 MMT from a January forecast of a -742,000 MT deficit.
A bearish factor for sugar was last Wednesday's projection from Conab for Brazil 2022/23 sugar production to increase by +15% y/y to 40.3 MMT as the crop recovers from the past season's adverse weather.
A negative factor for sugar was the April 22 report from the USDA's FAS that projected Brazil's 2022/23 sugar production would climb +2.9% y/y to 36.37 MMT and that 2022/23 Brazil sugar exports would increase by +3.7% y/y to 26.6 MMT.
Sugar prices were undercut on April 20 when Brazil's crop agency, Conab, raised its Brazil 2021/22 sugar production estimate to 35 MMT from a Nov estimate of 33.9 MMT.
The outlook for larger sugar crop sizes in India and Thailand to offset reduced sugar production in Brazil is bearish for prices. On April 15, the Indian Sugar Mills Association (ISMA) raised India's 2021/22 sugar production estimate to 35 MMT from 33.3 MMT, up +12.2% y/y, and said sugar exports would jump to a record 9 MMT. India is the world's second-largest sugar producer.
Also, the Thailand Office of the Cane & Sugar Board reported on March 22 that Thailand's 2021/22 sugar production from Dec 7-Mar 19 was at 9.6 MMT, and the total Thailand 2021/222 sugar harvest Dec 7-Mar 31 may reach 10 MMT, a 3-year high. As a result, the Thailand Office of the Cane & Sugar Board expects Thailand to export 7 MMT of sugar this (2021/22) marketing year. Thailand is the world's second-largest sugar exporter.
A supportive factor for sugar is smaller sugar output in Brazil after last Thursday's data from Unica showed Brazil's 2022/23 Center-South sugar production in the first half of April fell -80% y/y to 127,000 MT.
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.