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W11: Weekly Sugar Update

Updated Mar 21, 2023
Tridge's global market analysts and country representatives take a deep dive into what happened during W11 in the global sugar landscape. In summary, raw sugar futures for May 2023 rose by 1.39% to USD 457.68/MT on ICE while white sugar went up by 0.9% to USD 585.6/MT on the London floor. S&P Global lowered the EU and UK sugar production forecast by 570K MT to 16.8M MT due to the impact of a recent pesticide ban. Brazil exported 786.16K MT of sugar and molasses in the first 8 working days of March earning USD 64.93M. Indian mills produced 28.2M MT of sugar since the start of the current season on Oct. 1, down 1% YoY. Lastly, Ukrainians expect an increase in sugar beet production in 2023 since more than 220K ha are planted which is more than last year’s 178K ha.


World Sugar Market (Mar 17)

Raw sugar futures for May 2023 on ICE rose by 0.26 cents, up 1.39% to USD 457.68/MT (20.76 cents/lb). White sugar for delivery of the same term on the London floor increased by USD 5.2, up 0.9% to close at USD 585.6/MT. The market continued to receive support from concerns about the prospect of declining production in China, India, Thailand, and the European Union (EU). Dealers also noted that export delays at the Brazilian port of Paranagua could disrupt the flow of sugar as well as soybeans.


Sugar Price Increases Surprisingly in EU (Mar 14)

Sugar is experiencing a spectacular increase, in the whole of the European Union, in the month of January 2023, since it gains 118 over December 2022 to mark an amount, according to the Observatory of the sector, of USD 787.52/MT (733 euros). This increase means that, in the last 365 days, the amount of a ton of sugar, in the EU as a whole, has risen 78% from the USD 465.21/MT (433 euros) it registered in January 2022.

S&P Global Cuts 2023/24 EU and UK Sugar Output Forecast as Pesticide Ban Bites (Mar 16)

S&P Global Commodity Insights has cut its 2022/23 forecast for sugar output in the European Union plus the United Kingdom by 570K MT to 16.8M MT, citing the impact of a recent pesticide ban. The outlook still represents growth of 1M MT compared to the 2022/23 sugar crop. The European Court of Justice earlier this year banned that granting of exemptions for the use of neonicotinoid pesticides that are harmful to bees. The ruling is deterring farmers from planting sugar beet because they fear crop damage. S&P Global said in an industry note seen by Reuters it now expects the sugar beet planted area in leading EU producer France to shrink by 7% in 2023/24.


Sugar Prices Rose in February (Mar 13)

White crystal sugar prices rose on the spot market in the state of São Paulo in February. “The support was attributed to the lower supply of better quality sugar (type Icumsa up to 180). However, even with little availability, weak demand led some mills to give up on selling prices, especially at the beginning and end of the month”, stated researchers from the Center for Advanced Studies in Applied Economics (Cepea), at Esalq/USP in a report. According to the document, the CEPEA/ESALQ Crystal Sugar Indicator (state of São Paulo) accumulated a rise of 1.24% in February, closing at USD 25.49/50kg bag (R$ 133.49) on the 28th from USD 25.22/50kg bag (R$ 132.09), by decreased by 1.41% compared to January at USD 25.58/50kg bag (R$ 133.98) and 8.77% compared to February 2022 at USD 27.64/50kg bag (R$ 144.78), in nominal terms. 

Sugar Exports Total 786.16K MT in the First Days of March (Mar 13)

Brazil exported 786.16K MT of sugar and molasses in the first days of March (8 working days), with accumulated revenue of USD 64.93M (R$ 340.04M), according to the Foreign Trade Secretariat (Secex), of the Ministry of Economy, on Mar 13. Last month, Brazil exported 1.147M MT of products related to the sugar-energy sector. In the entire month of March 2022 (22 working days), exports of products totaled 1.44M MT and total revenue amounted to USD 560.74M. In the analysis of tons per daily average, sugar and molasses exports totaled 98.27K MT/day in the period, more than 50% lower than in the same period of 2022 (65.47K MT/day). Shipment prices are more than 11% higher at USD 432.50/MT.

The Sugar Business Pace Is Slow, but the Indicator Remains Firm in Brazil (Mar 14)

The spot market for white crystal sugar in the state of São Paulo continues at a slow pace. Despite this, trading prices are firm. Since the beginning of this month, the CEPEA/ESALQ Indicator, Icumsa color from 130 to 180, has been operating just above USD 24.82/50kg (R$ 130) bag. Cepea researchers indicate that the supply of better quality sugar (Icumsa up to 180) remains restricted, while demand for the product for prompt delivery is weak.

What Is the Impact on the Sugar Market if India Exports More Than 1MT of Sugar? (Mar 16)

The market suffered a slight correction in relation to the 21USc/lb of Mar 14 after some houses announced their optimistic vision for the production of sugar in the Center-South of Brazil in 2023/24, with figures of up to 38MT. But another discussion has drawn attention: will India export more than the 6MT quotas already approved? A report prepared by hEDGEpoint, a company specializing in commodities and risk management, shows the impacts that an export between 5MT and 7MT can mean for global trade flows and, of course, for ending stocks in India. Currently, hEDGEpoint estimates around 34MT of sugar production during the 2022/23 harvest. Figures realized in February have been released and Maharashtra is already 2% below 2021/22, while the lead of Uttar Pradesh and Karnataka has been reduced.

Decreased Volume of Sugar Scheduled for Shipment at Ports in Brazil (Mar 17)

The total number of ships waiting to load sugar in Brazilian ports stood at 34 in the week ended March 15, compared to 36 in the previous, according to a survey carried out by the shipping agency Williams Brazil. According to the report, shipments of 1.3M MT of sugar were scheduled, compared to 1.52M MT the previous week. The greater part (827K MT) must be loaded through the Port of Santos (SP). Then come the port of Paranaguá, in Paraná (366.6K MT), Recife, in Pernambuco (45.08K MT), and Maceió, in Alagoas (61.55K MT). The sugar cargo to be exported consists of the VHP variety (1.24M MT), Cristal B150 (18.05K MT), and Refined A-45 (45.08K MT). The agency's report takes into account the vessels that are already anchored, those that are out in the open waiting to berth, and those expected to arrive by April 9th.


India Must Export More Sugar (Mar 17)

One discussion taking place in the global sugar market is that India may export more than previously anticipated, according to an analysis by hEDGEpoint. “In this report, we intend to discuss what an export between 5M MT and 7M MT could mean for global trade flows and, of course, for India's ending stocks”, says the entity. If the government allows an additional 1M MT of export quotas, ending stocks would drop to 4.4M MT and would result in extremely low availability on 23/24. “If India restocks to the 5.3M MT level, only 3.5M MT would be available for exports from the country. As a result, there would be a downtrend in the short term, while the March 2024 contract would face an uptrend. Even if the country manages to produce 34.5M MT this season, stocks should fall to a new minimum level if any additional quota is allowed”, he indicates.

India’s Sugar Output Down 1% So Far This Season (Mar 17)

Indian mills produced 28.2M MT of sugar since the current season began on Oct. 1, down 1% YoY, according to the Indian Sugar Mills Association. Lower sugar output from India, the world’s biggest producer of sweeteners, will leave hardly any surplus for additional exports during the current 20022/23 season. The government allowed mills to export only 6.1M MT of sugar in the 2022/23 season, but Prime Minister Narendra Modi’s administration was expected to allow a second tranche of shipments. Dampening speculation that India would permit the second tranche, government sources in mid-January said India was not looking at allowing more sugar exports. India’s absence from the market could lift global prices and allow rivals Brazil and Thailand to increase shipments. India exported a record 11.2M MT of sugar in the previous 2021/22 season. The Indian Sugar Mills Association in late January cut its 2022/23 output estimates by 7% to 34M MT from the previous forecast of 36.5M MT. Last year, Indian mills produced a record 35.8M MT of sugar. Unfavorable weather conditions have hit the sugar cane crop in the western state of Maharashtra, the country’s biggest producer, cutting crop yields. 

United States

Sugar Starts W11 With Significant Losses on the NY and London Stock Exchanges (Mar 13)

Sugar futures prices operated with a sharp drop on the New York and London stock exchanges on Mar 13. The market started W11 following oil, in addition to being optimistic about the crop in the Center-South region of Brazil. At around 8:34 am (Brasília time), raw sugar was down 0.90% in the main contract on the New York Stock Exchange (ICE Futures US), at USD 462.31/MT (20.97 cents/lb). In London, the low was 1.10%, at USD 583.40/MT. The sweetener market follows losses of more than 1% of oil in the external scenario on Mar 13, which impacts fuel prices and also the decision of mills on the production of sugar or ethanol. In addition, positive information about the 2023/24 crop in the Center-South of the country permeates the negotiations. However, there is attention to Asian origins. 

American Sugar Rises in Price Amid News About the Closure of a Sugar Factory in France (Mar 13)

From March 3 to March 10, sugar, coffee, and cocoa quotes on the ICE exchange behaved differently. Cocoa quotes fell, while coffee and sugar quotes rose. The growth of sugar quotes on the ICE exchange was caused by disturbing news from France. Tereos, the largest producer of granulated sugar and ethanol, announced an upcoming reorganization. A sugar factory is expected to close in the north of the country. This will lead to the dismissal of 123 workers and a sharp drop in the production of beet sugar. The management seeks to reduce its losses: if reorganization is not carried out, it will grow. On the one hand, beet sugar is in demand on the world market but many requirements have to be met, and several obstacles have to be overcome for its production.

Sugar Retreats on Bank Collapse Fears (Mar 14)

The May raw sugar contract dropped 12 cents representing 0.6%, to settle at USD 455.92/MT (20.68 cents a pound). Traders say sugar shows good resilience given the gloomy macroeconomic picture. This suggests that bullish fundamentals, such as the prospect of lower production, remain a driving factor for the market. May white sugar fell USD 1.30, down 0.2% to USD 581.30/MT.

NCA Welcomes the Office of the US Trade Representative’s Imported Sugar Move (Mar 17)

The National Confectioners Association welcomed a decision by the Office of the US Trade Representative to reallocate unused country-specific quota allocations under the tariff-rate quotas (TRQs) on imported raw cane sugar for 2023. As the trade organization noted, it has recently written to president Biden to encourage the government to take action to address high prices and low supplies of sugar for food and beverage manufacturing in the United States. Notably, the issue was touched upon by NCA president John Downs at this year’s State of the Industry Conference in Miami in W10, in which he highlighted the cost of sugar in the region, which remains of vital importance to the sector, remains an issue. According to MarketWatch, the price of candy and chewing gum increased by a factor of 12.2% YoY in recent government data releases. This corresponded with a 13.5% rise in sugar and sugar substitute costs, with the war in Ukraine cited as a key reason for the hike in costs. This in turn has impacted corn syrup costs, as consumer demand has continued to peak.


In Indonesia, Sugar Imports Still Taste Sweet Before Ramadan (Mar 16)

Ramadhan 1444 H falls at the end of March. Generally, the demand for several commodities increases ahead of Ramadan, including the demand for sugar commodities. This can be seen from the still-high volume of sugar imports in February 2023 which reached 413M kg. Nevertheless, sugar imports in February have shown a pattern of decreasing on a monthly basis. The volume of imports in that month decreased significantly when compared to the previous month which reached 537M kg. Based on the country of origin, most of Indonesia's sugar imports in February came from Thailand, amounting to 220.75 million kilograms. This figure decreased by about half when compared to the previous month which reached 414.55M kg. Furthermore, India became the second supplier of imported sugar to Indonesia. From India, 142.79M kg of sugar were imported.

The Price of Sugar in Indonesia Exceeds the Government’s Reference (Mar 16)

The price of sugar has been observed to continue to move up, even though the days of Ramadan are numbered. The Food Agency's Price Panel shows that the price of sugar continues to move up, from the beginning of 2023 which was recorded at USD 0.94/kg (IDR 14.34K). The current price is higher than the same period last year which was recorded at USD 0.94/kg (IDR 14.36K). The Food Agency's Price Panel records that the national average sugar price at the retail level is USD 0.94/kg (IDR 14.38K). In fact, at the end of 2022, the government had set a reference price for sugar consumption at USD 0.88/kg (Rp. 13.5K) in modern retail and USD 0.95/kg (Rp. 14.5K) in modern retail in Eastern Indonesia. However, the Main Director of Food Holding ID Food Frans Marganda Tambunan said that the current increase in sugar prices is still within reasonable limits. On the other hand, citing Trading economics, world sugar prices are predicted to move in the range of USD 21-22 cents per pound. It has jumped from its initial position in 2023 which is still around US 18 cents per pound. 


Malaysia’s Sugar Cane Industry to Be Developed to Meet Its Sugar Demand (Mar 14)

Malaysia’s sugar cane industry will be developed to help meet the nation’s demand for sugar, said Economy Minister Rafizi Ramli. He said that currently, the country is entirely dependent on importing raw sugar from Brazil following the closure of the sugar cane plantation in Chuping, Perlis, in 2012. He said the government is currently identifying land parcels of up to 405ha in North Perak for this purpose. “All (100%) of the country’s raw sugar is being imported, and when there are price increases or issues with currency and oil (prices), freight costs will be high. Therefore, the is a need for us to plant sugar cane, and the government will arrange for the [logistics] chain to ensure planters will have ready buyers,” he said. 


USD 2.43, a New Increase for Each Ton of Beets Supplied by Farmers (Mar 15)

Egyptian authorities agreed to approve another increase of USD 2.43/MT (75 pounds) of sugar beet, in addition to all other incentives related to quality (earliness/sweetness/cleanliness) that were previously agreed upon. This came to take the necessary measures towards directing all aspects of support to farmers and setting attractive prices for the supply of the sugar beet crop for this season, in contrast to the exceptional incentive bonuses that were approved for this season according to the contract with the farmers. It is noteworthy that the price of supplying a ton of cane and beets is USD 35.58 (EGP 1.1K) each during the current harvest season.


Ukraine Will Import Raw Cane Sugar Under a Simplified Procedure (Mar 16)

The Cabinet of Ministers of Ukraine canceled the need to obtain the approval of the State Reserve when the Ministry of Economy issued licenses for the import of raw cane sugar into Ukraine within the tariff quota. This was reported by the Ministry of Economy of Ukraine. The Government made the relevant decision as part of the deregulation of the economy at a meeting on March 14, 2023. Previously, the issue of optimizing the issuance of this approval was considered by the Interdepartmental Working Group on the Issues of Accelerated Review of State Regulation of Economic Activity under the chairmanship of First Vice Prime Minister, Minister of Economy of Ukraine Yulia Svyridenko and Deputy Prime Minister, Minister of Digital Transformation Mykhailo Fedorov.

Sugar Beet Production Will Increase in Ukraine in 2023 (Mar 16)

The area planted under sugar beets in 2023 will be more than 220K ha, which exceeds last year's figure (178K ha). On an industrial scale, sugar beets were grown in 14 regions of Ukraine. The yield of sugar beets in 2022 was 50.2MT/ha on average in the country, which is 3.9MT/ha more than in 2021. The yield of sugar beets was higher than the national average in Lviv (64.5MT/ha), Ternopil (56.3MT/ha), and Khmelnytskyi (51MT/ha) regions. 


Bangladesh Government to Ask Refiners to Lower Sugar Prices by USD 0.048/KG (Mar 19)

The Ministry of Commerce will soon request refiners and millers to reduce sugar prices by USD 0.048/kg (Tk5) as the government has reduced the import tax and value-added tax (VAT) on the essential ingredient. The real impact of the reduction of VAT and tax on the import of raw sugar is USD 0.043/kg (Tk4.5), but the ministry will ask the millers and refiners to reduce by USD 0.048/kg (Tk5) to fix its price at the retail level, Commerce Minister Tipu Munshi said on Mar 19. Raw sugar, which is imported under the reduced rate of tax and VAT, will come in the market within the next week, he also said.

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