Quick Look:
- NY’s Sugar and London’s White Sugar contracts saw similar rises by about 2.40%.
- India’s production fell 1.6%, while Brazil’s output rose 31.0% year-on-year.
- Record temperatures in Thailand and variable monsoons in India threaten sugarcane yields.
The New York World Sugar, under contract SBN24, observed an uplift of 0.47 cents, marking a 2.41% increase. Similarly, London’s ICE White Sugar for the SWQ24 contract rose by 13.70 points, a near-parallel increase of 2.40%. These upticks reflect the broader market sentiments influenced by production dynamics and climatic conditions impacting major producing nations.
India’s Production Drops 1.6% to 31.4 MMT
India is one of the largest sweetener producers globally. The country reported a decline in its October to April production cycle. For instance, its production fell by 1.6% year-over-year to 31.4 million metric tonnes (MMT), alongside the closure of 516 sugar mills compared to 460 in the previous year. The Indian Sugar and Bioenergy Manufacturers Association mentioned that more sugar mills have stopped operations for the year and finished crushing sugarcane, indicating a major shift in the industry’s operational landscape.
Conversely, Brazil showcased a robust increase in its sugar output during the first half of April, with a 31.0% year-on-year surge to 710 metric tonnes, as reported by Unica. Additionally, projections by Conab anticipate a 1.3% year-on-year increase in Brazil’s production, aiming for a total of 46.292 MMT in the 2024/25 season.
Thailand, India Face Climate Risks; Monsoon at 106%
Thailand and India have faced stark weather challenges that threaten cane crops. Thailand’s Meteorological Department highlighted record-high temperatures across over three dozen provinces in April, potentially jeopardising sugarcane yields. In India, while monsoon rains are expected to be 106% of the long-term average for June to September 2024, prior weather conditions have included extended sugar export restrictions due to fluctuating production levels, limiting exports to just 6.1 MMT for the 2022/23 season.
Prices Projected Between $19.70 and $21.35
Amid these developments, the sugar market outlook remains bullish, with prices expected to oscillate between $19.70 and $21.35. Top gainers in the corporate sphere include Kothari Sugars & Chemicals Ltd, which saw a significant price increase of 6.05%. However, top losers like Uttam Sugar Mills Ltd faced a downturn of 5.92%.
The StoneX forecast for a global sugar surplus shrinkage to 2.5 MMT from 3.8 MMT previously adds another layer to the market’s complexity, indicating tighter supplies ahead.