Weekly Product Updates

W42: Sugar Update

Sugar Beet
Vegetables
Brazil
Sustainability & Environmental Impact
Sugarcane
India
Market & Price Trends
Published Oct 26, 2023
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In W42 in the sugar landscape, on Monday, October 16, sugar futures on the New York Stock Exchange (NYSE) increased 0.07% to USD 0.2705 per pound (lb), influenced by the harvest advancing in the center-south of Brazil. Market pressure also stemmed from a 1% drop in international oil prices, which affected production decisions. On Tuesday, October 17, sugar futures experienced a significant increase of 1.63%, closing at USD 0.2749/lb, supported by concerns regarding global supply, particularly from Asia, and oil price fluctuations. However, Wednesday saw a drop to USD 0.2748/lb as the 2023/24 harvest in the center-south of Brazil looked favorable. The decline continued into Thursday and Friday, with prices reaching USD 0.2729/lb and USD 0.2685/lb, respectively, influenced by data from Brazil and India's market positioning, along with profit-taking following recent highs. Notably, India's food secretary expressed that domestic sugar shortages were unlikely, potentially opening the door for sugar exports from India.

In the first two weeks of Oct-23, Brazil exported 1.44 million metric tons (mmt) of sugar and molasses, generating USD 727.74 million in revenue. Meanwhile, in Oct-22 (19 working days), the total product exports reached 3.16 mmt, with accumulated revenue of USD 1.30 billion. When considering the daily average export rate, sugar and molasses exports for this period averaged 160,550 mt per day, marking a 3.6% year-on-year (YoY) decrease. Brazilian mills expect to sell 10 mmt of sugar in the 2024/25 crop year through ICE futures contracts by the end of Sept-24, similar to the amount sold in the previous campaign.

Meanwhile, sugar production in Karnataka, India's third-largest producing region, is projected to decrease by 42.30% to 3.45 mmt in the 2023/24 season due to reduced cane output and lower sugar recovery. In the previous 2022/23 season, the state produced 5.98 mmt of sugar. The state government anticipates a decline in sugarcane production for 2023/24 to 52 mmt, a notable decrease from the previous season's 70.5 mmt. Moreover, the sugarcane available for processing is expected to be reduced to 44.2 mmt compared to 60.36 mmt in the prior period.

In the 2022/23 marketing year (Oct-22 to Sept-23), Ukraine exported 427 thousand mt of sugar, and there's potential for a substantial increase in exports for the 2023/24 marketing year, with estimates ranging from 600 to 650 thousand mt. As of October 15, Ukraine had already collected 4.6 mmt of sugar beets from 96 thousand hectares (ha), representing 39% of the total area. The average yield was 47.7 mt/ha, and the total sugar beet harvest is projected at 11.8 to 12 mmt, the highest level since 2018, producing 1.5 to 1.6 mmt of sugar. This increase in sugar beet cultivation, to 250 thousand ha in 2023, can be attributed to the high profitability of sugar beet farming, primarily due to elevated global prices, as wheat cultivation became less profitable due to low prices.

Lastly, the Korean Bureau of Statistics reported on October 11 that the sugar price index for Sept-23, based on a 2020 baseline of 100, rose to 141.58. This signifies a 16.9% increase in sugar prices compared to the previous year. Analysts attribute the rise in sugar prices to the impact of climate change, which has led to decreased output in key producing regions.

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