Sugar prices concluded on a modestly lower note on Friday, with London sugar marking a four-week low. The sugar market has faced downward pressure this week primarily due to indications of increased sugar production in Brazil.
On Friday, Oct’23 expired at 26.27 with the Oct’23/March’24 spread valued at -0.21 points discount. As per the preliminary information, a record amount of sugar has been delivered on the expiry of the October contract on ICE exchange, estimated at 56,470 lots or around 2.87 million metric tonnes. Full details to be published by the exchange on Monday.
According to the latest report from Unica released on Tuesday, sugar output in Brazil’s Center-South region during the first half of September surged by 8.5% year-on-year, reaching 3.116 million metric tons (MMT). Furthermore, sugar production in the 2023/24 crop year, through mid-September, witnessed a remarkable 18.7% year-on-year increase, totaling 29.258 MMT. Notably, a larger proportion of crushed sugarcane—49.37%—was allocated for sugar production this year, compared to 45.47% in the previous year.
Supporting sugar prices, a rally in crude oil prices to a 13-month high on Thursday has provided a boost. Increased crude oil prices positively impact ethanol prices, potentially leading global sugar mills to redirect more of their cane crushing toward ethanol production, thereby limiting sugar supplies.