18 Brazil's Surging Sugar Production Drives Down Sugar Prices

1. Brazil's Surging Sugar Production Drives Down Sugar Prices Brazil's Surging Sugar Production Drives Down Sugar Prices Sugar prices exhibited a relatively stable performance on Monday, with slight variations amid contrasting factors influencing the market. While a weaker dollar lent some support to commodity prices, such as sugar, the continued surge in sugar production in Brazil remained a significant factor weighing on the market. Brazil's Sweet Boost in Sugar Production Brazil's Sweet Boost in Sugar Production In recent developments, Unica, the Brazilian Sugarcane Industry Association, reported an impressive 98% year-on-year increase in sugar output in the Brazil Center-South region for the second half of September, reaching 3.364 million metric tons (MMT). Moreover, sugar production in the 2023/24 crop year through September witnessed a substantial 23.8% year-on-year growth, totaling 32.615 MMT. What's more, a significant proportion of crushed sugarcane, accounting for 49.54%, was allocated to sugar production, marking a substantial rise from the 45.46% of the previous year.* Market Volatility in Recent Weeks Over the past month, sugar prices experienced considerable volatility, with New York sugar reaching a 12-year nearest-futures high on September 19, followed by London sugar achieving a 12-year high on September 14. This surge was primarily driven by concerns over shrinking global sugar production, which have cast a shadow over the market.* Rising Concerns of Global Sugar Deficit Rising Concerns of Global Sugar Deficit On September 5, Alvean, the world's largest sugar trader, issued a forecast of a 2023/24 global sugar deficit amounting to -5.4 MMT. This would mark the sixth consecutive year of sugar shortages. The

2. prediction stems from factors such as India's potential restrictions on sugar exports and Thai farmers shifting to more lucrative cassava crops from sugarcane.* India's Role in the Global Sugar Market India, a key player in the global sugar market, has recently come into the spotlight. There are speculations that the country might soon announce export restrictions on its sugar supplies. This concern intensified after Reuters reported on August 23 that India was contemplating banning its sugar mills from exporting sugar in the 2023/24 season starting in October. This potential action is attributed to a lack of monsoon rain, which has reduced India's sugar crop for the year. India's Weather Department stated that this year's monsoon rainfall from June to September was 6% below the average, marking the poorest monsoon in five years. India's food ministry plans to make a final decision on sugar exports for 2023/24 when more accurate estimates of total production are available.* Forecasts for India's Sugar Production Forecasts for India's Sugar Production India's Sugar Mills Association (ISMA) predicted a 3.4% year-on-year decline in India's 2023/24 sugar production, estimating it to be 31.68 MMT. This decline, if realised, could have a notable impact on the global sugar market. Thailand's Role in Sugar Production Thailand's Role in Sugar Production Thailand, the world's second-largest sugar exporter, is also facing challenges. The Thai Sugar Millers Corp projected a considerable 18% year-on-year decline in Thailand's 2023/24 sugar production, estimating it at 9 MMT, owing to severe drought conditions. Additionally, sugar trader Czarnikow anticipated a substantial 31% year-on-year drop in Thailand's sugar production for 2023/24, projecting a 17-year low of 7.4 MMT due to dry weather. The USDA's Foreign Agricultural Service (FAS) also predicted a 15% year-on-year fall in Thailand's 2023/24 sugar production to 9.4 MMT. Insufficient rainfall this year in Thailand, compared to the same period last year, combined with the looming El Nino weather system, which could further reduce precipitation in the next two years, poses significant concerns for the country. Thailand ranks as the world's third-largest sugar producer. Bra Brazil's Sugar Production zil's Sugar Production In contrast to India and Thailand, Brazil's sugar production saw an upward revision. Conab, the National Supply Company in Brazil, increased its estimate for the country's 2023/24 sugar production to 40.9 MMT, up from an April forecast of 38.8 MMT. Favourable weather conditions played a pivotal role in boosting sugarcane yields in Brazil. The Impact of El Nino on Sugar Production The Impact of El Nino on Sugar Production A potential disruptor to global sugar production is the El Nino weather pattern. In June, the U.S. Climate Prediction Center confirmed the presence of El Nino, characterised by a 0.5 degrees Celsius rise in sea surface temperatures across the equatorial Pacific Ocean and associated changes in wind patterns. Historically, El Nino brings heavy rains to Brazil and drought to India, negatively affecting sugar crop production. The last time El Nino influenced sugar crops in Asia was in 2015 and 2016, leading to soaring sugar prices.*

3. Global Sugar Production and Consumption Forecasts Global Sugar Production and Consumption Forecasts Key agencies like the USDA and the International Sugar Organization (ISO) have presented contrasting forecasts for global sugar production. The USDA, in its bi-annual report on May 25, predicted a 6.0% year-on-year increase in global sugar production for 2023/24, reaching a record 187.881 MMT. The report also anticipated a 2.3% year-on-year growth in global human sugar consumption to a record 180.045 MMT. In a striking contrast, the ISO projected a 1.2% year-on-year decrease in global sugar production for 2023/24, totaling 174.8 MMT, and indicated that the global sugar market would experience a deficit of -2.12 MMT, following a surplus of +852,000 MT in 2022/23. Conclusion Conclusion The sugar market remains poised at a crucial juncture, with various factors influencing supply and demand dynamics globally. While India, Thailand, and Brazil are pivotal players, weather patterns such as El Nino, along with differing predictions by key agencies, add to the complexity of the sugar market. As the industry navigates through these challenges, sugar prices are likely to continue responding to the ebb and flow of these intricate forces. Tradologie.com is a digital platform that connects buyers and sellers of bulk agro commodities across the globe. With the use of technology, Tradologie.com ensures seamless transactions between agro- exporters and importers. With 70,000+ verified suppliers from more than 100 countries and 600,000+ verified buyers worldwide, Tradologie.com is expanding quickly. If you want to register as a buyer, click here, If you want to register as a seller, click here. To stay updated about the latest developments in the agro-trading sector, follow Tradologie.com on all social media platforms.