The global sugar market experienced some price fluctuations in March 2023. On March 20th, 2023, May NY's global sugar price closed down at USD 20.48 cents/lbs, a 2% WoW decrease. Prior to that, the price had traded as high as USD 21 cents/lbs on March 10th, 2023, setting a new record high. The upheaval in the US banking industry, which has sparked some panic in the global financial market, was one of the causes of these fluctuations. The oil market is still plagued by banking uncertainties, which have lowered crude oil prices and ethanol prices. Global sugar mills may decide to focus more on producing sugar rather than ethanol, which could boost the availability of sugar.
Source: ICE
Price reached a record high in early March 2023 due to the low outlook for sugar production in India. The Indian Sugar Mills Association reported that since the beginning of the current season on October 1st, Indian sugar mills have produced 28.2 mt of sugar, a decrease of 1% YoY. The reason for this decline is poor weather which has harmed the sugarcane harvest in Maharashtra, the largest sugar producer in India. Crop yields have decreased, and more than a dozen Maharashtrian mills stopped cane crushing about two months earlier this year.
Moreover, forecasts for India's sugar production for MY 2022–2023 have decreased from the prior projection by 7% YoY to 34 million mt. Hence, the speculation that India would approve the second round of sugar shipments was diminished. India's withdrawal from the global market could increase sugar prices worldwide and create additional competition like Brazil to increase its supplies.
Despite the difficult production outlook in India, Brazil’s promising forecasts for a bountiful harvest have led the sugar prices to edge lower. Unica reported that from October 2022 through February 2023, Brazil's sugar production increased 4.5% YoY to 33.5 million mt. In addition, the appreciation of the US dollar against the Brazilian real has encouraged exports of agricultural commodities. Nonetheless, 786,161 mt of Brazilian sugar has been exported in March, representing a 50.1% YoY increase.
On the other hand, a prohibition on bee-harming neonicotinoid pesticides has also had an influence on sugar beet growing in Europe. Early this year, the European Court of Justice prohibited the issuance of exemptions for the use of these pesticides, discouraging farmers from planting sugar beet out of concern for crop damage. Due to this prohibition, France's largest sugar and ethanol manufacturer will cease operations at a facility in the north of the nation. In light of the current prohibition on pesticides, the European Union has also lowered its prediction for sugar production in MY 2022–2023, reducing it by a further 570,000 mt to 16.8 million mt.
In conclusion, March 2023 has seen some volatility in prices on the world sugar market as a result of a number of factors, including the lower ethanol prices, the decline in India's sugar production, the promising harvest in Brazil, and the European Union's ban on pesticides that harm bees. These aspects have an impact on sugar prices, which peaked in early March and have since fallen after reaching a record high. The ban on pesticides in Europe may cause a further decline in sugar production, while India's decreased production may result in higher prices and more competition from Brazil. Therefore, it is crucial to keep an eye on price movements and any potential effects they may have on the world sugar market in the upcoming months.