In W32 in the sugar landscape, on Monday, August 7, sugar futures rose 0.21% to 23.74 cents/lb on the New York Stock Exchange as Thailand's 2023/24 sugar production is forecast to drop 31% to a 17-year low of 7.4 million metric tons (mmt), due to adverse dry weather conditions. On Tuesday, August 8, sugar futures were down by 1.22% to 23.45 cents/lb due to concerns about weakened demand from China following a 12.4% year-on-year (YoY) decline in Chinese sugar imports in July, the most significant drop in six months. Market attention was also on India's ample sugar stocks, totaling 10.8 mmt at the end of July, reducing export-related concerns. Meanwhile, on August 9, sugar futures closed with a 1.1% increase at 23.71 cents/lb and continued to rise to 23.95 cents/lb on August 10, influenced by the International Sugar Organization's (ISO) projection of a 2.12 mmt decrease in global sugar production for 2023/24. By August 11, sugar futures surged by 1.59% to end W32 at 24.33 cents/lb, driven by the expectation of limited global supply and financial factors over the weekend.
The ISO forecasts a global sugar production deficit for the second consecutive season in 2023/24, primarily due to expected declines in Brazil's production and the seasonal nature of its harvest. The ISO also revised its surplus estimate for the current 2022/23 season to 493 thousand mt from 850 thousand mt. Meanwhile, CovrigAnalytics predicts sugar production cuts in the 2023/24 season in various countries, including Thailand by 2.52 mmt, India by 1.1 mmt, Pakistan by 505 thousand metric tons (mt), China by 304.35 thousand mt, the Philippines by 225 thousand mt, Mexico by 215 thousand mt, and the European Union (EU) by 250 thousand mt. These reductions are attributed to dry weather affecting crops and reduced cultivation areas. The El Niño phenomenon could further impact crop development and harvest between Aug-23 and Apr-24.
In Brazil's center-south, sugar production is projected to increase to 38.7 mmt, up from the previous harvest's 33.8 mmt, driven by increased allocation of sugarcane to sweetener production and favorable weather conditions. In Indonesia, sugar production is expected to rise to 2.7 mmt in 2023 from 2.4 mmt in 2022 despite the El Niño impact. Although the dry weather reduces sugar cane weight due to lack of rain, it has a positive effect of increasing sugar content. Furthermore, from Jan-23 to Jun-23, Indonesian sugar imports totaled 293,400 thousand mt, with an additional import of 697,600 thousand mt planned for Jul-23 to Dec-23.
India's ban on rice exports to stabilize domestic prices has sparked concerns over its potential impact on the sugar market. This is due to drought in key sugar-growing regions such as Maharashtra and Karnataka, which raised worries about reduced sugar production, potentially leading to a second consecutive year of decline starting from October. As a result, the Indian Sugar Mills Association predicts a 3.4% decrease in sugar production to 31.7 mmt in the 2023/24 period. Moreover, India's increasing use of sugar for biofuel production, diverting 4.5 mmt to ethanol, reflects a 9.8% YoY increase.