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W6: Weekly Sugar Update

Updated Feb 15, 2023
Tridge's global market analysts and country representatives take a deep dive into what happened during W6 in the global sugar landscape. In summary, global sugar production is predicted to decline slightly to 192.8M MT in the 2022/23 season from 193.2M MT in the previous campaign. According to the FAO, world sugar prices fell by 1.1% in January compared to the previous month, which is the first decline after the sharp rises of the previous two months. In São Paulo, Brazil, sugarcane production is estimated at 308.1M MT, up 3.2% compared to the previous cycle which was at 298.5M. India aims at limiting sugar exports to just over 6M MT down from 9M MT in the 2021/22 season. Thailand expects to export 9M MT of sugar in the 2022/23 season, up 17% from the previous period. Lastly, Kazakhstan plans to increase the area under sugar beet to 25K ha.


Green Pool Forecasts Global Sugar Deficit in the Crop Year 2023/24 (Feb 6)

A report by Australia-based sugar and biofuels analysts said they expect a decline in global production, particularly in India, Pakistan and the European Union. Meanwhile, consumption is forecasted to increase, albeit at a slower rate than last season. Green Pool predicts that global production will decline slightly to 192.8M MT, from 193.2M MT in the previous season, ending an upward trend following a disappointing 2019/20 crop. India is the second largest sugar exporter in the world. The country is expected to see the biggest drop of 2.3M MT to 34.5M MT. However, this decrease was partially offset by an increase in output in South-Central Brazil from 33.65M MT to 35.8M MT. To date, Indian mills have produced 21.6M MT of sugar since the start of the current season (which started on October 1), up 6% YoY, according to the Association of Sugar Industries.

World’s Sugar Market on February 7 (Feb 7)

The price of raw sugar for March 2023 on ICE fell 0.58 cents, down 2.7%, to 20.66 US cents/lb, further sliding from a six-year high at 21.86 US cents/lb in W5. The price of white sugar for delivery of the same term on the London floor fell USD 1.7, down 0.3%, to USD 549.6/MT. According to dealers, concerns about tight supply are easing. They expect a small shipment, likely from India.

Sugar’s Rally to a Six-Year High on Borrowed Time as Glut Looms (Feb 7)

The world should end this season with its first sugar surplus in four years, but you wouldn’t know it from how prices have surged. Futures hit a six-year high in W5, threatening more inflationary pain by increasing the cost of making baked goods, candy and soft drinks. While top exporter Brazil is set to collect a much bigger crop, those supplies won’t arrive until harvesting starts around April and right now the market is tightening. That’s because weaker output will likely force India to cap exports, while European production has been hit by drought and now faces uncertainty after a pesticide ban. Plus, Indian mills are diverting more cane to make ethanol and China’s reopening could lift demand. There are already signs that sugar’s rally is feeding through to higher retail prices for goods in grocery stores in the US and Europe.

World Sugar Prices Fell in January (Feb 9)

World sugar prices fell by 1.1% in January compared to the previous month, which is the first decline after the sharp rises of the previous two months, according to the food price index prepared by the United Nations Organization for Food and Agriculture (FAO). The drop in international sugar prices in January "was mainly due to the good progress of the harvest in Thailand and the favorable weather conditions for the development of cane crops in the main sugar-producing regions of Brazil," according to the organization. Concern over lower crop yields in India, which could affect export availability, contained more substantial declines in sugar prices. Likewise, the FAO also indicates that the rise in gasoline prices in Brazil, which supported the demand for ethanol, and the strengthening of the Brazilian real against the dollar helped limit the downward pressure on world sugar prices.


Sugar Retreats Further on ICE, March Contract Is Traded at USD 468.26/MT (Feb 6)

Raw sugar futures contracts fell on Feb 3, with the market retracting further from the six-year peak established earlier in the week. Raw sugar for March delivery closed down 42 cents, 1.9% less at USD 468.26/MT (21.24 cents a pound), having hit a six-year high of USD 481.93/MT (21.86 cents a pound) on Feb 1. The contract gained 1.3% for the week, after rising 6.3% the previous week.

Optimism Marks Forecasts for the Sugarcane Harvest in Brazil (Feb 6)

The first estimate by hEDGE point Global Markets for the 2023/24 sugarcane harvest in the Center-South already showed some optimism in terms of recovery. The first number was around 580 MT of cane. However, the view has changed and is now even more optimistic. Given the recent hot and rainy weather in the higher producing regions, there is an expectation of a strong recovery. Therefore, total sugarcane volume is revised to 595MT.

Sugarcane Production in São Paulo Is Estimated at 308M MT (Feb 7)

Sugarcane production in São Paulo for the 2022/23 harvest, the largest in Brazil, is estimated at 308.1M MT, a volume 3.2% higher than in the previous cycle (298.5M MT). Compared to the previous survey, carried out in August 2022, there was an 8.7% increase in production estimates. Data from the third survey, for December 2022, were prepared by the Economic Department of the Federation of Agriculture and Livestock of the State of São Paulo (FAESP), with data from the National Supply Company (CONAB). After São Paulo, the second largest producing state in the country is Goiás, with an estimated production of 71M MT. In third place comes Minas Gerais, with an estimate of 68M MT. The area harvested in the state suffered a retraction of 1.4% compared to the previous harvest and amounts to 4.15M ha. Despite this, the favorable climate enabled a 4.7% gain in productivity, which reached 74,295 kg/ha in this cycle. 


India to Limit Sugar Exports to 6M MT (Feb 9)

With production lower than the previous harvest, India must limit sugar exports to just over 6M MT in the 2022/23 season, compared to the 9M MT previously forecasted by the Indian Association of Sugar Mills. The action sent prices higher in New York. After Brazil, India is the world's largest exporter of sugar. Its customers include Indonesia, Bangladesh, Malaysia and the United Arab Emirates. Indian food production is expected to stand at 34M MT this season, down from the previous estimate of 36.5M MT, and lower than the 35.8M MT produced in the previous marketing year. 

United States 

US Sugar Beet Yields Offset a Drop in Cane Production (Feb 8)

The good yields reported by sugar beet growers in the United States this season will offset the not so good numbers from sugar cane growers in the South and ensure high levels of sugar production for the country. The US Department of Agriculture (USDA) raised its estimate for sugar beet production in its monthly supply and demand to 5.1M MT from 5.04M MT in the report indicating that sugar beet yields in the top five regions exceeded 10-year averages. On the other hand, the department reported problems for Louisiana sugarcane growers. “With the end of the sugar campaign, the USDA contacted the mills regarding the final production of the crop year. Mills confirmed that yields were below previous USDA estimates due to the freeze in late December,” he said. Louisiana sugar production was reduced by 82,858 TC to 2.03M TC. Total US sugar production, including beet and cane, is projected at 9.23M short tons in the 2022/23 season (October-September), basically at the same level as in 2021/22 and on track to be the second highest already registered.

USDA Lowers Forecast for US Sugar Production and Inventories (Feb 10)

The United States Department of Agriculture (USDA) monthly supply and demand report for February brought new figures for the 2022/23 sugar harvest in the United States. The Department estimates production at 9.231M MT, compared to the 9.248M MT indicated in January. For 2021/22, the production estimate was 9.157M MT. The USDA is estimating imports of 3.463M MT of sugar in 2022/23, up from 3.458M MT in January. Final sugar stocks for the 2022/23 season in the United States are forecasted at 1.874M MT, compared to the 1.885M MT indicated in January. Sugar consumption in the United States should reach 12.640M MT in 2022/23, the same number as the previous estimate, and against the 12.688M MT projected for 2021/22.


Thailand Plans to Increase Sugar Exports to 9M MT in 2022/23 (Feb 10)

Thailand expects to export 9M MT of sugar in crop year 2022/23, up 17% from the previous period. The country, one of the world's biggest exporters of the commodity, plans to produce 11.5M MT of sugar, grinding 106M MT of sugarcane by the end of the season in March, said Samart Noiwan, director of the strategy division and planning board. Thailand consumes 2.5M MT of sugar a year, he said. This year's sugarcane production has returned to the 100M MT level for the first time since 2019 due to favorable global prices that have led farmers to grow more cane. Sufficient rainfall also helped, Samart said. In 2021/22, Thailand produced 10.15M MT of sugar, crushed 92.07M MT of sugarcane and exported 7.69M MT of sugar.


With Agricultural Production Threatened in the EU, Tractors Take to the Streets of Paris, France, in Protests (Feb 9)

Sugar beet production for sugar in the EU block should be the most affected crop, after banning the use of pesticides for the severe yellow virus. Sugar beet growers in the EU were allowed to use an insecticide, but the decision was dropped last month following a court ruling. Now, the concern is a decline in the area planted by the crop, which makes the block one of the largest sugar producers. There are even fears of closing sugar factories, according to the Reuters news agency. The European Union represents the third largest sugar power in the world, behind only Brazil and India, with the 2022/23 crop forecasted at just over 16M MT, according to the US Department of Agriculture (USDA, in English). Producers claim that, if there are production losses, imports from the EU, which currently amount to just over 2M MT, tend to skyrocket. On the other side, environmentalists say pesticide residues harm soils and wildlife and welcomed the EU decision against the use of sugar beet seeds treated with neonicotinoid insecticides that can harm bees. Farmers argue that sugar beet plants do not attract bees and that the ban leaves them exposed.


A New Rise in Sugar Prices in “Region 3”, in Which Spain Is Located (Feb 8)

In relation to November, the price increased by USD 32.14 (30 euros), while in comparison to December 2021 the amount increased by 65%. The average price of sugar in the EU, during 2022, has been USD 535.75/MT (€500), gaining 24.4% while in the aforementioned "region 3" it was USD 664.33/MT (€620), gaining 33% over the previous campaign when Brussels placed it at USD 499.14/MT (465.83 euros). The latest report from the EU Sugar Market Observatory has placed the average price of sugar, during December 2022, at USD 712.55/MT (655 euros), gaining 33% from the previous month while, in relation to 2021, the increase is 55.5% from the initial USD 451.10 (€421). As regards "region 2" in which Brussels includes some of the main producers in the Union, France and Germany, the average amount has reached USD 668.62/MT (624 euros), after earning USD 49.29 (€46) the previous month. In the inter-annual data, in that area, an increase of 51.8% can be seen from the initial USD 440.39/MT (411 euros) to the USD 668.62/MT (624 euros) already mentioned that the statistics register in this latest report issued from the Belgian capital. 


Kazakhstan Plans to Increase the Area Under Sugar Beet to 25K Ha (Feb 9)

The situation that arose in 2022 in Kazakhstan with sugar exposed the problems of the domestic sugar industry as a whole. Self-sufficiency in sugar in the country was only 40%. Kanat Zhauymbayev, Director of the Department of Agri-Food Markets and Processing of Agricultural Products of the Ministry of Agriculture of the Republic of Kazakhstan, spoke about this during a round table at the CCS site. According to him, the Government has adopted a comprehensive plan for the development of the sugar industry, which consists of 33 points. For a number of them, the MOA plans to discuss with experts in order to develop the necessary measures. “As part of the comprehensive plan, measures are envisaged, in particular, to increase the area under crops. It is planned that by 2024 the area under sugar beet will be increased to 25K ha. This year, an increase is planned from 10.1K to 16.1K ha. Measures have been taken to reduce VAT. In particular, when importing sugar cane, zero import duties are provided for this year…”  

Prospects for the Development of the Sugar Industry for the Next Five Years Were Discussed in Kazakhstan (Feb 10)

Problematic issues and prospects for the development of the sugar industry in Kazakhstan were discussed by the expert community at the site of the CCS. Representatives of interested ministries and National Companies, heads of sugar factories and the industry Association took part in the round table meeting. In 2022, the country approved a comprehensive plan for the development of the sugar industry for the next five years. In particular, measures are being taken to load sugar factories with raw materials through the expansion of sugar beet sown areas, modernizing existing factories, providing financing and protecting the market. As a result, by 2026 the share of domestic production should increase from 7% to 43%, said the director of the department for processing agri-food markets of the Ministry of Agriculture of the Republic of Kazakhstan.

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