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Sugar prices extended this week’s rally on Wednesday, with NY sugar posting a 15-month high and London sugar posting a 16-month high. The prospects of tighter global supplies are underpinning sugar prices.
On Tuesday, Bloomberg reported that India is considering cutting import duties on sugar to boost supplies and lower prices ahead of an expected surge in demand during festival season. The move is a further sign of the supply strain facing the global sugar market, as India is usually a sugar exporter and last imported sugar in substantial volumes during the 2017-18 season.
India’s Meteorological Department reported on Wednesday that India’s cumulative monsoon rainfall (June-Sep) was 13% below normal as of August 19, a substantial improvement from 42% below normal on June 30.
On July 31, India’s Meteorological Department said that monsoon rainfall in India during August and September “will likely be below normal.” India’s Earth Science Ministry has warned that this year’s monsoon in India could be the weakest in 11 years. India’s monsoon season runs from June through September. India is the world’s second-largest sugar-producing country.
Last Friday, Czarnikow predicted a 2027/28 global sugar deficit of 2.9 million tonnes due to lower sugar cane and sugar beet plantings. The group forecast that 2027/28 global sugar production will fall 0.7% — to 177 million tonnes, driven mainly by weather disruptions in India, the EU, and Thailand.
Due to drought and hot weather in Europe, sugar production in the European Union and the UK is set to decline to 14.98 million tonnes this year, the lowest level in 11 years, according to data from S&P Global Energy.
Lower sugar output in Brazil is bullish for sugar prices after Unica reported on August 6 that Brazil Center-South June sugar production fell 26.3% — to 3.903 million tonnes. Brazil is the world’s largest sugar-producing country.
Concerns that dry weather from an El Niño event could disrupt global sugar production are bullish for prices. The emergence of an El Niño is likely to curb rainfall in Brazil, India, and Thailand, the world’s three largest sugar-producing regions.
On July 8, the US Climate Prediction Center said the El Niño weather pattern that emerged across the equatorial Pacific last month will likely be one of the strongest in more than 75 years.
More details: https://www.barchart.com/story/news/3935626/concerns-about-tighter-global-supplies-underpin-sugar-prices