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W9: Weekly Sugar Update

Updated Mar 7, 2023
Tridge's global market analysts and country representatives take a deep dive into what happened during W9 in the global sugar landscape. In summary, EAEU beet sugar production in the 2022/23 season amounted to 6.7M MT, up 8% compared to the previous season. Brazilian sugar and molasses exports in February 2023 totaled 1.147M MT, more than 33% lower than in the same period last year. Indian sugar production may be lower than expected due to the early ripening of sugarcane. France's sugar beet growing area is set to fall to a 14-year low in 2023 despite high prices. Egypt’s sugar industry imported 51K MT of Brazilian raw sugar in 2023 with an aim of producing 48K MT of white sugar valued at USD 24.60M. Lastly, Zimbabwe was hit by Cyclone Freddy which destroyed the Hippo Valley's sugarcane plantation which may cause sugar shortages and high prices.

Europe and Asia

EAEU Completes Processing of Sugar Beets Harvested in 2023 (Feb 28)

Since the beginning of the season, 5.9M MT of beet sugar has been produced in the Russian Federation. According to the analytical service of Soyuzrossahar, on Feb 24, 2023, sugar factories in the Russian Federation completed the processing of sugar beets. In total, 65 sugar factories operated in the 2022/23 season. Since the beginning of the season, 43.28M MT of sugar beets have been processed (5.84M MT more than the previous season) and 5.9M MT of beet sugar has been produced, which is 9% more than in the previous season. The processing of sugar beets has been completed in the Republic of Belarus, the Kyrgyz Republic, and the Republic of Kazakhstan. In the Republic of Kazakhstan, two sugar refineries, Koksu and Taraz, continue processing raw sugar. The total volume of beet sugar production in the 2022/23 season in the EAEU countries amounted to 6.7M MT, which is 8% higher than the level of the previous season.


Sugar Market Continues to Operate With Slight Increases on the US and UK Stock Exchanges (Feb 27)

Sugar futures prices continued with gains on the New York and London stock exchanges on Feb 27. At around 12:58 pm (Brasília time), the March/23 raw sugar contract was up 0.41% and quoted at USD 478.18/MT (21.69 cents/lb). The May/23 contract was up 0.35% and was trading at USD 441.36/MT (20.02 cents/lb), while the July/23 contract was priced at USD 431.22/MT (19.56 cents/lb) and has gained 0.33%. At the London terminal, the maturity of March/23 of the white type rose 6.20%, to USD 568.20/MT. The August/23 contract had appreciated by 6.10% and traded at USD 553.50/MT. 

Sugar Closes Lower With Consolidated Market and Tight Supply in the Short Term (Feb 27)

Sugar futures closed lower on international exchanges on Feb 24, with the market consolidating, "after reaching a six-year high this month". Data on consumption and inflation in the US, led some investors to sell riskier assets, such as commodities. In New York, on ICE Futures, the March/23 contract was traded at USD 469.14/MT (21.28 cents/lb), down 30 points compared to the day before. The May/23 display fell 67 points, trading at USD 433.65/MT (19.67 cts/lb). The other lots retreated between 25 and 58 points. Also according to Reuters, traders said there is good support for sugar as short-term supplies remain tight. 

Sugar Hits 6-Year High in The US, UK, and Brazil Stock Exchanges (Feb 28)

Sugar futures contracts closed strongly valued on Feb 27 supported by concerns about the supply of the commodity in the current season. Analysts interviewed by Reuters pointed out that concerns relate to the prospects for a drop in production in India and Mexico, which were also supported by the announcement that the Government of Brazil will resume the tax on fuel, which may favor a greater targeting of production from sugar cane to ethanol. On ICE Futures in New York, the March/23 maturity of raw sugar was contracted on Feb 27 at USD 487.00/MT (22.09 cents/lb), an appreciation of 81 points, up 3.8% compared to the prices of the previous session, higher quotation since November 2016. Still, according to Reuters, operators said that the market continued to get support from the short-term supply tightening, with the March contract premium for May at around 1.65 cents before its expiration on Feb 28 fair.

In Alagoas, Rains Extend the Sugarcane Harvest Until April (Feb 28)

Excessive rainfall recorded throughout the state since October 2022 delays the removal of sugarcane from the field and Alagoas runs the risk of leaving between 1-2M MT of “cane standing” in the current cycle, according to estimates from technicians in the sector. Revenue losses, that is, the money that will stop circulating in the State if this sugarcane is not harvested, can vary from a minimum of USD 32.99M to USD 65.97M (R$ 170M to R$ 340M). The value of standard cane in the State (114 kg of ATR) is currently USD 29.88/MT (R$ 154). On average, the yield of sugarcane harvested in this season is slightly higher, ranging from 118 to 135kg of Total Recoverable Sugar per ton. In this scenario, the average price of sugarcane is estimated at USD 32.99/MT (R$170).

Brazil’s Sugar Exports in February Are More Than 33% Lower Than in the Same Period of 2022 (Mar 1)

Brazil exported 1.147M MT of sugar and molasses in the entire month of February 2023 (18 working days), with accumulated revenue of USD 100.54M (BRL 518.18M), according to the Foreign Trade Secretariat (Secex), of the Ministry of Economy, Mar 1. The volume is more than 33% lower than in the same period last year. In the whole of last month, Brazil exported 2.119M MT of products related to the sugar-energy sector. In the entire month of February 2022 (19 business days), product exports totaled 1.723M MT and total revenue of USD 676.54M. In the analysis of tons per daily average, sugar and molasses exports totaled 63.75K MT/day in the period, more than 29% lower than in the same period of 2022 (90.72K MT/day). Shipment prices are more than 15% higher at USD 451.50/MT.

Climate Stabilizes, la Niña Weakens, and Sugar Prices Strengthens in Brazil (Mar 1)

The expressive rainfall volumes recorded in the last 30 days should remain in the first week of March. The La Niña phenomenon loses strength giving way to a period of climate neutrality. This forecast is recorded in the Agro Mensal newsletter published by Itaú BBA. With regard to sugar prices, the document assesses that the reduction in the estimate for the Indian harvest has strengthened the prices of the product in New York. “Prices strengthened in late January and early February. The March/23 price ended the first half of the current month at USD 21.36/lp (2/15), up 8.3% compared to the last 30 days (1/15). The appreciation of prices happened after the reduction of the estimate of sugar production of the Indian harvest announced by ISMA (Association of Sugar Mills of India).

Sugar Ends the Week Close to USD 463/MT Amid Crop Fears in India (Mar 3)

Sugar futures prices closed on Mar 3 with a significant rise in the New York and London stock exchanges. The sweetener market was mainly supported by concerns about the 2022/23 crop in India. However, there are still bearish factors that are being monitored. The most traded maturity of raw sugar on the New York Stock Exchange rose 3%, at USD 461.21/MT (20.92 cents/lb), with a high of USD 463.85/MT (21.04 cents/lb) and a low of USD 447.98/MT (20.32 cents/lb). In London, the first contract rose 2.72% on the day, at USD 588.40/MT.


India’s Sugar Production May Be Lower Than Expected Due to Early Ripening of Sugarcane (Feb 27)

Lower sugar production could prevent the world's second-largest sugar exporter from exporting more, while potentially supporting world sugar prices and helping competitors Brazil and Thailand boost exports. India has estimated sugar production for the 2022/23 season (ending September 30) to be around 34-34.3M MT, down from 35.8M MT in the previous crop year. However, sugarcane output in the top-producing state Maharashtra and the third-largest producing state Karnataka both fell due to the early arrival of the harvest. 

India May Export More Sugar in 2022/23 (Mar 1)

India could export up to 1M MT more sugar in the 2022/23 season if production is at the upper end of current estimates, an official at one of the country's biggest sugar and ethanol makers said. Avantika Saraogi of Kolkata-based Balrampur Chini Mills (BACH.NS) said on the sidelines of the Dubai Sugar Conference that current estimates for India's sugar production ranged from 33.5M to 34.5M MT. India has exported just 6.1M MT of sugar so far in 2022/23, down from a record 11M MT the previous season. Government and industry officials played down the prospect of more exports due to an expected drop in production, particularly in the main producing state of Maharashtra. Saraogi said, however, if the crop exceeds 34.0M MT and the government sees enough stocks in April, it may well approve up to 1M MT of new exports.

Dozens of Sugar Mills End Crushing Early in India’s Biggest Producer (Mar 2)

More than two dozen mills in Maharashtra state, India's top sugar producer, had halted cane crushing by the end of February, nearly two months earlier than last year, due to adverse weather. The early closures suggest that Maharashtra will produce much less sugar than the initial estimate of 13.8M MT and will reduce the country's total production. Lower sugar production could prevent the world's second-biggest exporter from allowing additional shipments, potentially propping up global prices and opening up space for rivals Brazil and Thailand to increase their exports. The western state of Maharashtra, which accounts for more than a third of India's sugar production, produced 9.51M MT of sugar in the 2022/23 marketing year, which started Oct. over the same period last season.

India’s Sugar Production Rises 1.8% YTD (Mar 3)

Indian mills have produced 25.8M MT of sugar since the start of the current season on Oct 1, up 1.8% YoY. The slight increase comes in the face of a smaller number of plants still operating in the 2022/23 season, of 467 units, versus 484 at the same time last year, according to the association. In the current season, however, 528 plants had started operations so far, versus 516 indicated at the same time in 2022. The information comes after an Indian trade association reduced, earlier this week, India's sugar production in 2022/23. Dozens of mills in Maharashtra state, India's top sugar producer, had stopped crushing cane until the end of February, nearly two months earlier than last year, due to adverse weather, a senior state government official said in W9.

United States

With the Prospect of a Drop in Production in India, Sugar Prices Close With Appreciation on the New York Stock Exchange (Feb 27)

In Feb 27 session, sugar futures closed with new highs on the New York and London Stock Exchanges. The March/23 raw sugar contract ended with an appreciation of 0.81%, trading at USD 487.00/MT (22.09 cents/lb). The May/23 contract registered an increase of 0.62% in which it closed at USD 3.94 (R$ 20.29), while the July/23 contract ended at USD 3.82 (R$19.71) with a gain of 0.48%. On the London Stock Exchange, the future price of the May/23 contract for the white type ended the day with a gain of 9.30% and was quoted at USD 571.30/MT. The August/23 maturity registered an increase of 8.10% and was negotiated at USD 555.50/MT. Still, according to information from Reuters, the prospects of falling production in India contributed to the high sugar prices in this session.

Sugar Quotes on the US Ice Exchange Interrupted a Four-Month Rally (Feb 27)

In February, sugar become cheaper after a rally that lasted from late September to January. In 4 months, it has risen in price by 22%, and in February it lost less than 1% from those high prices. Some analysts see the reason for its fall in the fact that its production is growing, while others believe that the market will “recharge” due to a deeper technical rollback. After a 4-month rally, prices are coming down as promising sugarcane crops from Brazil to Thailand are expected. Investors, fearful of production growth, switched to profit-taking.


Sugar Beet Growing Area to Shrink to 14-Year Low in France (Feb 28)

France's sugar beet growing area is set to fall to a 14-year low in 2023 despite high prices, with farmers deterred by possible crop damage due to pesticide restrictions, the head of the sugar beet group said. Based on seed purchases, farmers should sow 6% to 7% less in 2023 than the previous year, CGB director general Nicolas Rialland told Reuters at a Paris agricultural fair. A 6% drop could take the area sown with sugar beet, used mainly to produce sugar and ethanol, to 378K ha, the lowest since 2009, official data showed. The cultivation area was 402K ha in 2022. French farmers have suffered bad harvests in recent years and a severe drought has cut the 2022 crop by 7% from the previous year. 


The Situation With Prices on the Sugar Market in Russia Is Stable (Mar 1)

The Ministry of Agriculture assesses the situation with prices in the sugar market in Russia as stable. The ministry indicates that, currently, the price situation in the sugar market is stable. The increase in production, as well as the accumulated commodity stocks at the beginning of 2023, contribute to the formation of a stable price situation in this market. Thus, according to the ministry, as of March 1, producer prices increased by 7.5% YoY, which is below the level of inflation. The Ministry of Agriculture noted that, according to Soyuzrossahar, in the current production season of 2022/23, the volume of sugar beet processing in Russia increased by 16% compared to the previous season and amounted to 43.2M MT, of which 5.9M MT of sugar have already been produced. 


Sugar Prices Quietly Record, Beware of Import Chaos (Mar 1)

The price of sugar in the world has been quietly moving up to a record high since 2016. Likewise, the price of sugar in Indonesia is currently more expensive than in 2022. Data from the Food Agency Price Panel on Mar 1 at 8.30 WIB shows that the national average sugar price at the retail level has increased by USD 0.0098 (IDR 150) to USD 0.94/kg (IDR 14.52K). The national average sugar price in February 2023 was also more expensive than in January 2023, from USD 0.93/kg (IDR 14.34K) to USD 0.94/kg (IDR 14.380). An increase compared to the February 2022 price which was recorded at USD 0.92/kg (IDR 14.17).

United Kingdom

In US and UK, Sugar Jumps More Than 2% On Mar 1 on the NY and London Stock Exchanges Amid Signs of Global Shortages (Mar 1)

Sugar futures contracts soared on the New York and London stock exchanges on Mar 1 amid signs of global scarcity, in addition to financial and information from origins, with India, which faces the impact of climate on the crop. The most traded month of raw sugar on the New York Stock Exchange rose 2.49% to USD 453.49/MT (20.57 cents/lb), with a high of USD 455.25/MT (20.65 cents/lb) and a low of USD 441.81/MT (20.04 cents/lb). In London, the first contract jumped 2.40% on the day, at USD 575.90/MT. After falling the day before, futures contracts for sugar rose again on Mar 1 with the main support of fundamentals. 

In US and UK, Sugar Retreats in NY and London With Exchange Rate Pressure and Profit-Taking (Mar 2)

Sugar prices fell moderately to significantly on Mar 2 on the New York and London stock exchanges. After rising the day before, the market was impacted by profit-taking but follows the exchange rate and data from Brazil. On the other hand, the crop in India, impacted by the climate, concerns operators. The most traded maturity of raw sugar on the New York Stock Exchange fell 1.26%, to USD 447.76/MT (20.31 cents/lb), with a high of USD 454.59/MT (20.62 cents/lb) and a low of USD 445.33/MT (20.20 cents/lb). In London, the first contract fell 0.54% on the day, at USD 572.80/MT. After skyrocketing on the eve amid signs of global scarcity, in addition to the financial, the sugar market has fallen since Mar 2 morning with a natural movement of profit-taking. The exchange rate contributes to the scenario. The appreciation of the dollar against the real tends to encourage commodity exports but weighs on sweetener prices.


Egypt Continues to Produce Local Sugar and Receives the Beet Supply Season Within Days (Feb 28)

The Ministry of Supply and Internal Trade continues to produce local sugar from cane, and the rates of supply of the cane crop from farmers to factories have exceeded 3.25M MT, since the start of the season at the end of last December. It also completed its preparations to receive the beet supply season within days. The Ministry of Supply and Internal Trade receives, during March, the season of supplying sugar beets, aiming to produce 1.8M MT of local sugar from beets, in light of the increase in the area of land cultivated with beets, especially in the New Delta, and the season continues until mid-July. The Ministry of Supply aims to achieve self-sufficiency in sugar, after its success in achieving 91% of it during the last season, as well as reducing the gap between domestic production and consumption. The state also aims to move towards export after achieving self-sufficiency, to increase the dollar revenue.

Egypt’s Fayoum Sugar Industry Imports 51K MT of Brazilian Raw Sugar This Year at USD 24.6M (Mar 2)

Salah Fathy, managing director and head of the Fayoum Sugar Industry Company affiliated with the Ministry of Supply, revealed that 51K MT of Brazilian raw sugar was imported this year to produce about 48K MT of white sugar, at a value of USD 24.60M. He said that the local production of sugar, whether from cane or beet, covers about 90% of consumption, while the remaining 10% is provided by importing raw sugar from the raw and refining it in factories to cover all needs. He pointed out that Egypt consumes about 3.3M MT of sugar annually, while about 2.8M MT of sugar (cane/beets) is produced annually, and 500K MT is imported through the General Authority for Supply Commodities. 


Cyclone Freddy on the Rampage Among Sugarcane Farms (Mar 3)

Sugar shortages and sky-high prices are foreseen in Zimbabwe. This is after a part of the Hippo Valley sugarcane plantation, owned by Tongaat, was destroyed by a hailstorm on Feb 27. Chiredzi sugarcane farmer Daniel Kadema said the winds that came with Cyclone Freddy were devastating. He is one of several contract farmers utilizing the Hippo Valley estate. This development comes on top of the already strained trading relations between farmers and sugar refinery companies. Economists forecast sugar shortages and say the increase in raw sugar prices will be a contributing factor to the looming shortage. 

Sugarcane Farmers Demand Better Deal From Millers (Mar 5)

Sugarcane farmers in the Lowveld are appealing for “better” repayment terms for advances they receive as working capital from millers, arguing the current funding structure is threatening their viability. Tongaat Hulett, which owns Zimbabwe’s major sugar milling assets, runs a scheme under which farmers get advances as working capital and are required to repay in 30 days. Failure to repay, the farmers, who produce about 46% of sugarcane, are charged 16% interest in Zimbabwe dollars or 12% in US dollars, which is compounded if they fail to pay within 30 days. According to the Association of Sugarcane Farmers (ASF), this leads to unsustainable growth of debts.

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