Sugar Rose due to Indian Production Cut

On Monday, sugar prices rose amid India’s output production decline in the 2022/23 season due to lower yields and weak recovery.

Sugar futures increased by 3.00% to $20.26 per pound on February 27’s Asian afternoon session.

Previously, the All India Sugar Trade Association (AISTA) had a forecast of 34.50 million tons worth of output for the period.

However, based on AISTA’s revised figures, the country’s production will decline to 2.30 million tons. Therefore, it is lower than the actual volume of 35.80 million tons in 2021/22. For the second estimate, AISTA mentioned that the revised consensus excludes the diversion of sucrose for ethanol making.

Also, sugar in Maharashtra is anticipated to be lowered by 11.30 million tons versus 13.70 million tons. Likewise, Karnataka harvests are expected to drop by 5.50 million tons against 6.20 million tons within the same period.

On the other hand, yields in Uttar Pradesh are expected to jump by 10.80 million tons in the 2022/23 season. It is slightly higher than the 10.20 million tons from the previous period.

According to AISTA, the decrease in production in Maharashtra and Karnataka is mainly caused by weaker volumes and recovery rates. Several sugar factories started to close or already closed, showing signs of slacking in the season in the former region.

Furthermore, India is one of the major producing countries in the world. The organization added that in the current season, its domestic consumption would come at 27.50 million tons. Additionally, exports would rise to 6.00 million tons.

ISO Slashed Global Sugar Surplus

The International Sugar Organization increased 2021/22 global sweetener deficit to -2.25 million metric tons. It is a more significant volume decrease than the prior -1.67 MMT. Also, it slashed its 2022/23 surplus consensus to 4.15 MMT from a November estimate of 6.19 MMT.

On February 17, India said it would not authorize additional sugar exports over 6.10 MMT, already permitted this season.

Moreover, lower production in Europe was beneficial for the commodity’s price, according to analysts. The European Association of Sugar Manufacturers anticipated that the EU 2022/23 grain harvest would drop by -7.00% year-on-year. It would equate to 15.50 MMT.