On Thursday, the price of sugar #11 futures plummeted to the lowest since March amid an improved supply guidance by the US Department of Agriculture (USDA).
Sugar futures for March delivery plunged -2.49% to ¢20.40 per pound on December 21, following Thursday’s -2.38% drop. Furthermore, market analysts predict an additional -1.37% decline to ¢20.12 a pound in the coming session.
Brazilian farmers expect an improvement in their yields after a US Climate Prediction Center (CPC) forecast of wetter weather conditions. The weather shift surprised traders who expected arid weather to plague the second-largest sugar producer for the remainder of 2023.
Despite El Niño wreaking havoc in its farmlands for most of the year, Brazil maintained a robust sugar output. The Brazilian Sugarcane Industry Association (UNICA) reported a 35.00% year-over-year (YoY) lift in the country’s harvests in the second half of November.
Moreover, from April to November, it posted a 23.50% YoY increase in sugar yield to 40.82 million metric tons (MMT). Brazil also hit a November record for soft commodity exports at 3.70 MMT.
Elsewhere, India’s food ministry banned local sugar mills from crushing sugarcane to produce ethanol in the 2023-2024 supply. As a result, Australia-based Green Pool Commodity Specialists said the domestic supply of the sweetener could expand by 2.00 MMT.
Meanwhile, due to severe drought, the Thai Sugar Millers projected a -36.00% YoY slide in Thailand’s sugar output. It added that it expects the impact of El Niño to be more severe in the next two years.
USDA Expects Record Global Sugar Output Next Year
The USDA sees global sugar production reaching 183.46 MMT in the 2023-2024 season, pointing to a 4.70% YoY increase and a new record since the agency started keeping track.
In comparison, the USDA forecasts human sugar consumption to increase at an annual rate of 1.20%. The agency also anticipates global ending stocks to shed -13.30% YoY to a 13-year low of 33.68 MMT.
Conversely, the International Sugar Organization (ISO) estimates a decline in the sweetener’s global supply of -1.20% YoY to 174.80 MMT. It also expects the world sugar market to face a -2.12 MMT deficit from a 0.85 MMT surplus in the 2022/23 supply season.
