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At the close of trading, Oct NY world sugar #11 (SBV23) fell 0.30 (-1.22%) on Wednesday, while Oct London white sugar #5 (SWV23) fell 7.10 (-1.02%) on Wednesday, says Barchart.
Sugar prices slipped on Wednesday due to Tuesday's negative impact amid signs of an increase in sugar production in Brazil. Unica said on Tuesday that sugar production in Central-South Brazil in the first half of July rose by 8.9% y/y to 3.241 million tons, while total sugar production during the 2023/24 crop increased by 21.0% by mid-July. 9% y / y and amounted to 15.470 million tons. Also, 48.14% of crushed sugar cane was used for sugar production this year, up from 43.54% last year.
Favorable weather conditions in Brazil prompted trading company Czarnikow to raise its forecast for sugar production in Central-South Brazil in 2023 by 500,000 tons to 38.2 million tons. Also Datagro on June 29 suggested that Central-South Brazil, the main region of sugar production, will produce a record 39.1 million tons of sugar in the marketing year 2023/24, which began in April, up 16% year-on-year.
Sugar prices are supported by excessive drought in Thailand, the world's third largest sugar producer, which could reduce the country's sugar output. Since the beginning of the year, Thailand's rainfall is 28% lower than the same period last year, and the start of the El Niño weather event could further reduce rainfall over the next two years. Czarnikow Group predicts that Thailand's sugar production this year could fall for the first time in three years and hit the second lowest level since 2009/10.
One of the factors driving sugar prices up is concern that El Niño-related weather could disrupt global sugar production. On June 8, the U.S. Climate Prediction Center announced that sea surface temperatures in the equatorial Pacific had risen 0.5 degrees Celsius above normal and wind direction had changed enough to meet El Niño criteria. Typically, El Niño weather is characterized by heavy rainfall in Brazil and drought in India, negatively impacting sugarcane crops. The last time El Niño caused a drought in the Asian sugar crop was in 2015 and 2016, pushing up the price of sugar.
According to the USDA biannual report released on May 25, global sugar production in 2023/24 will increase by 6.0% y/y to a record 187.881 million tons, while global consumption of sugar in food will increase by 2.3% y/y to reach record 180.045 million tons. The USDA also predicts that global sugar stocks will fall by 15.2% y/y by the end of 2023/24 and hit a 13-year low of 33.455 million tonnes.
The International Sugar Organization (ISO) on May 22 lowered its 2022/23 global sugar production forecast to 177.4 million tonnes from the previous forecast of 180.4 million tonnes and cut its 2022/23 global sugar surplus forecast to 852,000 tons from the previous forecast of 4.15 million tons. On May 4, ISO predicted a global sugar glut for 2023/24 of 2.1 million tonnes.
