Sugar futures plummeted for fourth straight days due to increased production in Brazil and low import data from China.
The cost of sugar no.11 futures on the Intercontinental Commodity Exchange US (ICEUS) declined by 2.58% to $0.18 per pound in Thursday’s trading session, its fourth consecutive daily fall.
Supporting its bearish movement is a slow demand in China as it imported 280,000 tons in July. It is down by 35.20% from the same month last year, based on data published by the General Administration of Customs on August 19.
The sweet commodity was already struggling from the previous session after tumbling energy prices in Brazil, which added to the incentive for mills to focus on production.
Sugar’s output in the country’s main center-south cane belt increased by 8.40% in the second half of July to 3.30 million tons, higher than the precursory record in the same period a year earlier.
The rise in production is attributed to mills’ heightened efforts in producing the sweetener.
According to a report released by the industry group Unica, mills allocated 47.70% of all their harvested cane to sugar production. This data surpassed the 46.20% record seen at this time in 2021.
The decision was made since the sweetener gives millers better financial returns in comparison to ethanol.
India’s additional sugar exports
Last week, the Indian government announced additional sugar exports by 1.20 million metric tons for the year ending in September 30 to aid the nation’s mills from defaulting on their contracts.
This would be on top of the country’s current quota of 10.00 million metric tons for a total of 11.20 million metric tons.
India is the world’s second-largest producer of sugar. On April 15, the Indian Sugar Mills Association (ISMA) raised the state’s 2021/22 raw cane production estimate to 35.00 million metric tons from 33.30 million metric tons. It is up by 12.00% year-over-year.
