Sugar prices on Monday posted moderate losses for a second session on the outlook for abundant exports from India, the world's second-largest sugar producer.   The Indian Sugar Mills Association said last Friday that it expects India to export 6 MMT of sugar in 2021/22, although that would be down -15% y/y from 7.1 MMT in 2020/21.

Another bearish factor for sugar is weakness in the Brazilian real against the dollar.  The real (^USDBRL) fell -1.4% Monday and is just above last Thursday's 5-month low.  A weaker real encourages export selling by Brazil's sugar producers.

Sugar prices are consolidating modestly below their recent 4-1/2 year nearest-futures highs. Sugar has underlying support from the recent damage to Brazil's sugar crops from frost and drought.  The International Sugar Organization (ISO) on Aug 27 raised its global 2021/22 sugar deficit estimate to -3.83 MMT from a May estimate of -2.65 MMT after frost in July damaged Brazil's sugar crops.

Record-high ethanol prices in Brazil support sugar prices after Brazil ethanol hydrous fuel prices climbed to a record high of 3.2999 reals/liter on Sep 24.  The record-high ethanol prices encourage Brazil's sugar mills to boost ethanol production at the expense of sugar production.

Tighter sugar supplies in Brazil are bullish for prices.  Last Monday's data from Unica showed Center-South Brazil 2021/22 sugar production the first half of Sep fell -20.5% y/y to 2.548 MMT, a bigger decline than expectations of 2.650 MMT.  Also, the percentage of cane crushed for ethanol production in the first half of Sep rose to 55.06% from 53.85% last year, signaling less cane crushed for sugar production.

On Sep 8, the Thailand Sugar Millers Corp forecast Thailand 2021/22 sugar production could climb +44% y/y to 11 MMT due to beneficial rain and increased plantings.  Thailand is the world's second-largest sugar exporter.

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