On Wednesday, sugar prices went up amid lower production, cutting of global surplus estimates, and a plunge in the dollar.
Sugar futures for May delivery increased by 1.73% to $21.16 per pound on March 22’s Asian afternoon session.
Last month, sugar rose to a 6-1/4 nearest-futures high due to unfavorable global weather. The US Climate Prediction Center said the La Niña weather pattern stopped El Niño. It has a 61.00% possibility of occurring in the year’s second half.
If it takes place, it could bring torrid rains to Brazil and a drought in India, badly affecting the production of crops.
However, lower supplies are beneficial for prices, based on analysts. The International Sugar Organization (ISO) raised its 2021/22 global sugar deficit speculations to -2.25 million metric tons. Higher than their November estimates of -1.67 MMT, slashing its 2022/23 surplus consensus to 4.15 MMT from 6.19 MMT.
Nonetheless, the ISO anticipates that the global 2022/23 sugar outputs will rise by 4.80% year-on-year. It marks a record high of 180.40 MMT.
Moreover, the Indian Sugar Mills Association (ISMA) cut its 2022/23 supply estimate to 34.00 MMT from 36.50 MMT in October.
Last Friday, the ISMA announced that India’s output from October to March 15 fell by 1.10% YoY to 28.20 MMT.
Egypt Undergoes Sugar Export Ban
The Minister of Trade and Industry, Ahmed Samir reported a three-month embargo on sugar exports. However, this does not include quantities that surpass local market needs.
Analysts say the Ministry of Supply and Internal Trade will assess the excessive quantities. Still, they must undergo ministerial approval before being exported.
The ban serves as a preventive action to have enough sugar for domestic consumption, both human and industrial use. Moreover, shipping the commodity usually generates higher company returns as global prices rise.
Based on an expert, there has been a rise in cultivation to recover from shortages in sugar cane. Also, it was mentioned that the supply ministry’s reserves should be sufficient for three to five months.