Another year of tightness in global sugar S&D likely, analyst Julian Price opines

International sugar prices have improved in the last few sessions, after the fall below 20 cents/lb in mid-April. On Tuesday, the sugar futures prices rallied to a 3-week high: the July NY World sugar #11 closed up 2.41%, approaching the key level of 20 cents/lb once again, and Aug London ICE white sugar #5 closed up 2.40% at $585.70 pmt. What are the key factors influencing global sugar prices? What is the production outlook of major sugar exporting nations?

To get answers to these complex questions, ChiniMandi spoke exclusively to Julian Price, Sugar Trade Analyst and Executive Director, ACP/LDC Sugar Industries Group.

Julian Price is not optimistic about good sugar production in Thailand in the current season. He feels that global sugar supply and demand could face yet another tight year, and there is a significant risk of lower sugar production and exports in key sugar producing countries, and tighter quarterly trade flows.

Q. What is your outlook on Brazil’s new sugarcane season that began in April 2024? Do you expect an overall drop in production compared to the previous season?

Ans.- I will await UNICA’s latest numbers this week that will show data on the start of the new Centre/South Brazil crop. We may also have some news from the New York sugar week this week. Though I am not attending it, but I might hear the odd comment from this important annual gathering. The dry weather may be helping the sugarcane crop in the C/S Brazil at the moment, but it could be negative for the year as a whole. The sugar/ethanol “mix” should continue to strongly favour sugar even compared with 2023-24. Overall, given good yields, we might see a similar sugar production to last year. Let’s wait for the UNICA data this week.

Q. Thailand’s sugarcane yield is also expected to drop due to drought conditions. What is your outlook on the final production for the ongoing season in Thailand that ends in September?

Ans: Thailand is looking bad owing to dry weather, a heat wave (again) and poor water reservoir levels. Last year’s sugar production was around 8.8 million tonnes and there were earlier hopes of 11 million tonnes from the coming season, but that looks quite unlikely now.

Q. How much does the international sugar market rely on India?

Ans: The international market continues to rely on Indian toll refining, but overall, whilst “normal” exports remain banned, the international market has probably entirely priced in the Indian trade flow estimates, so very little on a global scale, I’d have thought.

Q. Do you foresee the sugar deficit to increase by the year’s end?

Ans: Yes, the poor outlook for Thailand and others could easily push the global S&D into deficit again.

Q. What is your outlook on international sugar prices for the next 6 months?

Ans: I’d say between 19 and 22 cents/lb, with an upside bias towards challenging the 20 cents/lb level in the coming weeks.

Q. How are dietary trends influencing global sugar consumption patterns? Do you expect global sugar consumption to increase?

Ans: In Europe, dietary factors do seem to be affecting sugar consumption negatively. But on a global scale, it seems to be statistically impossible to detect dietary factors that could be influencing consumption. The Covid lockdowns and sugar taxes did seem to affect consumption negatively, but I think you would struggle to measure a statistically significant effect of dietary factors on a global scale. In truth, measuring global sugar consumption is extremely challenging.


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