Weekly Product Updates

W44: Sugar Update

Sugar Beet
Sugarcane
Sugar
Market & Price Trends
Published Nov 10, 2023
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In W44 in the sugar landscape, on Friday, November 3, the sugar futures market saw a price surge of more than 1% on the New York and London stock exchanges. Despite a slight dip in the morning, the market rebounded due to a stronger focus on Asian origins and concerns over the potential impact of rainfall on the harvest in Brazil. On the New York Stock Exchange (ICE Futures US), the most traded raw sugar maturity increased by 1.06%, reaching USD 0.28 per pound (lb), with a high of USD 0.28/lb and a low of USD 0.27/lb. In W44, the primary sugar contract experienced a surge of 3.81% in the North American market. Despite earlier technical declines in profit-taking, market attention remained on supply until Friday. The primary concern continues to be global supply, as weather conditions in India and Thailand have negatively impacted the crop, causing fears among investors.

Furthermore, global sugar prices declined by 2.2% in Oct-23, after a price surge of 9.8% in Sep-23, with prices reaching their highest level since 2010. Despite a modest reduction in October, sugar prices were still 46.6% higher compared to a year ago. In the past few weeks, sugar has been an unpredictable commodity in the food market due to the concerns over supplies caused by extreme weather conditions in sugar-producing countries. High energy prices and the impact of the El Niño weather phenomenon further enhanced concerns. Moreover, the Food and Agriculture Organization’s (FAO) overall Food Price Index decreased by 0.5% compared to last month, mainly due to lower sugar prices.

Brazil's center-south sugar production has increased 22% in the first half of October compared with the same period in 2022, with a total production of 2.25 million metric tons (mmt). According to the Brazilian Sugarcane Industry Association (UNICA), 32.77 mmt of sugarcane were crushed in this period, resulting in a 17.6% YoY increase. The output during this period has surpassed the previous market prediction of 2.21 mmt.

Sugar production in India is projected to decrease by 8% to 33.7 mmt in the 2023/24 season due to low rainfall in key producing areas. In the previous 2022/23 season, the production estimate was 36.6mmt. Lower sugar production could lead India to refrain from allocating export quotas and consequently support high global prices. The forecast did not include the net sugar production after the sucrose diversion for ethanol production. However, the sugar output is estimated to surpass the country's annual consumption of 27.85 mmt.

Thailand’s cabinet released a new regulation on sugar prices and exports in W44 in response to the price surge in sugar markets. In 2023, the country’s sugar production cost has increased significantly due to the drought in the major producing areas. The cabinet has approved a cap on the ex-factory prices for granulated sugar at USD 0.53 per kilogram (THB 19/kg) and refined sugar prices at USD 0.56/kg (THB 20/kg). Additionally, the government has restricted sugar exports, requiring approval from the ministry for any exporter looking to ship more than one metric ton of sugar.

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