On Wednesday, sugar futures prices inched lower due to more substantial production and an expected bumper crop in India.
US sugar futures for October delivery dipped by -0.05% to $19.59 per pound on August 28’s Asian afternoon session.
A bearish factor for the grain’s price is the optimism for above-average monsoon rains in India, which will result in a bumper crop. Based on the Indian Meteorological Department’s report, the country received 632.50 mm of rain, 3.00% up from the comparable 611.80 mm long-term average.
Moreover, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) reported its reserves hitting 9.1 million metric tons (MMT). In addition, it mentioned a sugar surplus of 3.6 MMT.
On the other hand, severe fires in Brazil caused by drought and extreme heat led the commodity’s price rally to a 1-1/4 month high. Roughly 2,000 fire outbreaks damaged around 80,000 hectares of planted sugarcane in Sao Paulo, Brazil’s top producer of the sweetener.
According to Green Pool Commodity Specialists, 5 MMT of the crop were burned. Meanwhile, dealers mentioned that a deeper-than-expected decline in production in Centre-South Brazil in August’s first half could boost sugar prices.
Last Thursday, the sweetener’s prices increased when the country’s production estimate was cut to 42 MMT.
India Sees Sugar Export Opportunities
Following the fire outbreaks in Brazil, the Indian sugar industry urged the government to allow exports.
ISMA’s director general said that exporting two million tons of the crop can provide massive relief to the sector. Enabling sugar shipments can also ensure adequate stock for domestic consumption, lessen mills’ financial burdens, and give timely payments to farmers.
Previously, ISMA asked the government for permits to ship surplus commodities after it assessed domestic demand and supply.
In addition, the favorable international sugar market conditions and a positive production forecast show an excellent case for allowing deliveries from India.
