On Thursday, March NY world sugar #11 (SBH24) closed with a gain of +0.10 (+0.42%), while March London ICE white sugar #5 (SWH24) closed up +9.20 (+1.40%).
Sugar prices rebounded on Thursday, overcoming early losses. Positive sentiments regarding global sugar production emerged after the Thai Sugar Millers Corp revised down the high end of its Thailand 2023/24 sugar production estimate to 7 MMT to 7.5 MMT from the November estimate of 7 MMT to 8 MMT.
A contributing factor to the bullish trend is the reduced sugar production in India. The Indian Sugar Mills Association (ISMA) reported a -3.2% y/y decline in India's 2023/24 sugar output from October to January 31, amounting to 18.7 MMT. ISMA forecasts a -9.7% decrease for the full marketing year, projecting India's 2023/24 sugar production at 33.05 MMT, down from 36.6 MMT in 2022/23. India's Weather Department reported a 6% below-average monsoon rain, the lowest in 5 years, prompting restrictions on sugar exports until further notice.
Support for sugar prices is also evident in signs indicating the maintenance of India's sugar export ban and tight global supplies following a 50% export tax on molasses from sugar refining.
On Tuesday, the Thai Sugar Millers Corp projected a 32% y/y decline in Thailand's 2023/24 sugar production to a 17-year low of 7.5 MMT due to a severe drought. Thailand, the world's third-largest sugar producer and second-largest exporter, faces challenges with below- average rainfall and the potential impact of the El Nino weather system.
There is concern about the bullish impact of an El Nino weather pattern disrupting global sugar production, historically leading to adverse conditions in Brazil and India.
On the bearish side, StoneX raised its 2023/24 global sugar surplus estimate to 3.4 MMT on Monday due to increased sugar output in Brazil. Brazil's significant jump in sugar production, reported by Unica on Jan 25, presents a bearish factor, with a +148.6% y/y increase in the first half of January to 48,000 MT and a +25.5% y/y rise in the 2023/24 crop year through mid- January to 42.099 MMT. More sugarcane is being crushed for sugar than ethanol, indicating a shift in production priorities.
The USDA's bi-annual report on Nov 23 projected a +4.7% y/y increase in global 2023/24 sugar production to a record 183.461 MMT. Additionally, the USDA forecasts a +1.2% y/y rise in global human sugar consumption to a record 178.431 MMT, with a -13.3% y/y decline in global sugar ending stocks to a 13-year low of 33.681 MMT. In contrast, ISO's Aug 10 projection anticipates a -1.2% y/y decrease in global 2023/24 sugar production to 174.8 MMT, leading to a deficit of -2.12 MMT from the 2022/23 global sugar surplus of +852,000 MT.
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