Weekly Product Updates

W20 2024: Sugar Weekly Update

Published May 24, 2024
image
In W20 in the sugar landscape, the global sugar market reflected dynamic production, pricing, and supply shifts. Brazil's significant surge in sugar production, along with projections for record output, has led to a decrease in prices, impacting market stability. In contrast, India's decision to halt sugar exports has stabilized local prices amidst electoral activities and erratic rainfall. The US and Mexico have experienced slight fluctuations in sugar prices, influenced by various factors such as supply shortages, weather conditions, and economic policies. Additionally, El Niño has severely damaged sugarcane plantations in Negros Occidental, Philippines, leading UNIFED to advocate for the import of 200 thousand mt of sugar to avert supply shortages and price hikes.

1. Weekly News

Brazil

Brazil's Center-South Sugar Production Surged 84.25% in Apr-24, Exceeding Expectations

According to the Brazilian Sugarcane Industry Association (UNICA), the sugar production of Brazil's center-south region surged by 84.25% in the second half of Apr-24 compared to the previous year. Mills produced 1.84 million metric tons (mmt) of sugar, surpassing market expectations of 1.73 mmt. This increase was due to a higher sugarcane crushing pace, which reached 34.57 million tons, an increase of 61.3% year-on-year (YoY), exceeding forecasts.

UNICA's director noted that this trend might change in the upcoming months due to anticipated lower yields. In the latter half of Apr-24, 48.4% of the crushed cane was used for sugar production, up from 43.5% the previous year. Additionally, ethanol production in the region rose by 51.86% to 1.51 billion liters.

United States

USDA Lowers 2023/24 Sugar Production Forecasts, Raises Imports

The United States Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) May 10 report for 2023/24 lowered forecasts for domestic beet and cane sugar production and deliveries while raising imports, resulting in higher ending stocks. Initial projections for 2024/25 indicate higher domestic production, increased imports from Mexico, steady deliveries, and lower ending stocks with an 11.7% stocks-to-use ratio.

Kyrgyzstan

Challenges and Solutions in Kyrgyzstan's Sugar Industry, Addressing Reliance on Imports and Ensuring Food Security

Kyrgyzstan's sugar industry faces challenges due to reliance on imports despite favorable weather conditions for beet cultivation. While local production covers only 65% of domestic needs, cheap sugar imports from Russia and Kazakhstan threaten farmers' profitability and food security. The government has initiated initiatives like providing soft loans to support farmers, but the decline in beet farms continues. Farmers advocate for self-reliance and criticize beet exports, which contribute to domestic sugar shortages and price hikes. Efforts to address the issue include proposed bans on sugar exports and calls for increased domestic beet cultivation. However, outdated farming practices and reliance on imported seeds hinder efforts to improve yields and address the sugar deficit.

Philippines

El Niño Damages Negros Occidental Sugarcane, UNIFED Calls for 200 Thousand MT Sugar Imports

The El Niño weather phenomenon has critically damaged sugarcane plantations in Negros Occidental, Philippines, prompting the United Sugar Producers Federation (UNIFED) to call for the importation of 200 thousand metric tons (mt) of sugar to prevent supply shortages. The UNIFED president highlighted the unprecedented heat, noting that many farms will not recover, leading to a 30% drop in sugar production as forecasted by former officials. The drought has delayed local milling, necessitating imports to fill the supply gap and stabilize prices. Additionally, UNIFED urged the provincial government to invest in cloud seeding operations to mitigate future drought impacts.

The Philippines SRA Considers Sugar Imports to Prevent Shortages and Price Hikes

The Philippines Sugar Regulatory Administration (SRA) is considering allowing sugar imports during the post-milling season to prevent potential shortages and price hikes. The suggested import volume of 185 thousand to 200 thousand mt aims to bolster the country's sugar buffer stock. Despite increased sugar production, current levels may not meet the estimated demand, especially for refined sugar. The SRA plans to monitor sugar stocks closely and initiate imports if necessary to maintain a stable supply and prevent a repeat of the sugar crisis experienced in 2022. If approved, the imports could arrive between Jul-24 and early Sep-24, before the next milling season begins. The proposed program aims to stabilize market prices, benefit sugarcane farmers, and ensure sufficient supply for industrial users. As of May 5, 2024, the country's sugar stocks are higher compared to 2023, providing a foundation for potential import decisions.

2. Weekly Pricing

Weekly Sugar Pricing Important Producers (USD/kg)

* All pricing is wholesale * Varieties: Refined sugar

Yearly Change in Sugar Pricing Important Producers (W20 2023 to W20 2024)

* All pricing is wholesale * Varieties: Refined sugar
* Blank spaces on the graph signify data unavailability stemming from factors like missing data, supply unavailability, or seasonality

Brazil

Brazil's sugar prices decreased by 1.82% week-on-week (WoW) to USD 0.54 per kilogram (kg). The recent surge in sugar production in Brazil has led to a decrease in prices as of W20. UNICA's latest report revealed a significant increase in sugar production, with a notable rise of 84.25% YoY in the second half of Apr-24, reaching 1.84 mmt. Brazil's sugar output for the 2023/24 marketing year (MY) also rose significantly by 25.7% YoY to 42.42 mmt, and projections indicate a further increase to a record 46.29 mmt for the 2024/25 MY, sugar prices are expected to remain under pressure due to ample supply.

India

The price of sugar in India remained steady at USD 0.49/kg, showing no WoW changes but reflecting an 11.36% YoY increase. India's decision to halt sugar exports this season contributed to stabilizing local prices amidst electoral activities and erratic rainfall in key sugarcane-growing regions like Maharashtra and Karnataka.

United States

The US experienced a slight increase in sugar prices, rising from USD 0.40/kg in W19 to USD 0.41/kg, a 2.50% WoW increase but a 26.79% YoY decrease at USD 0.56/kg in W20 2023. This decrease can be attributed to improved global sugar supply prospects. Furthermore, the National Oceanic and Atmospheric Administration (NOAA) forecasted improved weather conditions , which could positively influence production patterns in key-producing regions, potentially boosting global sugar crops and easing prices.

Mexico

Mexico's sugar prices rose 1.17% WoW and 1.76% month-on-month (MoM), at USD 1.73/kg in W20. In Mexico, the prices of essential food items like sugar have experienced significant increases, exacerbating the strain on consumers' budgets. Factors such as underlying inflation, supply shortages, and unstable fuel prices contribute to this trend.

Pakistan

The price of sugar remained stable in Pakistan during W20, at USD 0.49/kg. Furthermore, the sugar industry in Pakistan is considering raising bagasse prices, a byproduct of sugarcane used as fuel in factories, to align with coal prices. This move aims to address the rising costs of thermal energy and heavy taxation. Pakistan's vast sugarcane cultivation presents an opportunity to utilize it for electricity generation, offering a solution to the country's energy needs. However, the proposed increase in bagasse prices may exacerbate challenges for industries seeking affordable energy, contributing to Pakistan's struggle with high energy costs and resulting in substantial losses.

3. Actionable Recommendations

Implement Drought Mitigation Strategies

In response to the impact of El Niño on sugarcane plantations in Negros, the Philippines should prioritize the implementation of drought mitigation strategies such as cloud seeding operations to alleviate future drought impacts and ensure the resilience of the sugarcane industry.

Enhance Sugar Importation Planning

Given the potential for sugar shortages in the Philippines due to damaged sugarcane plantations, the country should collaborate with relevant stakeholders to enhance importation planning, including monitoring sugar stocks closely and initiating imports during the post-milling season if necessary, to maintain a stable supply and prevent price hikes.

Invest in Modern Farming Practices and Research

To address the challenges faced by the sugar industry in the Philippines, it is imperative to implement a comprehensive strategy aimed at enhancing domestic sugar production and reducing the reliance on imports. Furthermore, the Philippines should allocate resources towards educating farmers on modern and sustainable farming practices tailored to sugarcane cultivation. Lastly, the country should establish research and development programs focused on developing high-yielding sugarcane varieties suited to local climate conditions and expanding existing government support programs such as soft loans to incentivize farmers to invest in modernizing their farming operations. By integrating these efforts, the Philippines can strengthen its sugar industry, enhance food security, and empower local farmers to contribute to the nation's economic growth and self-reliance.

By clicking “Accept Cookies,” I agree to provide cookies for statistical and personalized preference purposes. To learn more about our cookies, please read our Privacy Policy.