Sugar Costs Fall on Weak Crude Oil Costs and | U.S. Finance Information
Might NY world sugar #11 (SBK25) Tuesday closed down -0.12 (-0.66%), and Might London ICE white sugar #5 (SWK25) closed down -6.80 (-1.30%).
Sugar costs Tuesday prolonged their week-long slide to 3-week lows. Weak point in crude costs weighed on sugar after WTI crude (CLJ25) fell to a 2-3/4 month low Tuesday. Weaker crude costs undercut ethanol costs and should immediate world sugar mills to divert cane crushing towards sugar manufacturing slightly than ethanol, boosting sugar provides.
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Demand considerations are additionally weighing on sugar costs after sugar merchants Wilmar Worldwide Ltd and Sucres et Denrees SA took report supply of 1.7 MMT of uncooked sugar towards the March NY futures contract that expired final Friday. Massive deliveries are usually thought of bearish for costs, indicating that sellers have few different markets to promote to.
Sugar costs have been already on the defensive from final Wednesday when sugar trader Czarnikow projected Brazil’s 2025/26 sugar manufacturing would climb to a report 43.6 MMT, saying producing sugar is more profitable than ethanol manufacturing.
In the meantime, the Worldwide Sugar Group (ISO) final Thursday raised its 2024/25 world sugar deficit forecast to -4.88 MMT from a November forecast of -2.51 MMT, exhibiting a tightening market from the 2023/24 world sugar surplus of 1.31 MMT. Final Thursday, the ISO additionally cut its 2024/25 world sugar manufacturing forecast to 175.5 MMT from a November forecast of 179.1 MMT. For its half, Inexperienced Pool Commodity Specialists on February 5 projected that the worldwide sugar market will shift to a surplus of +2.7 MMT within the 2025/26 crop 12 months from its estimate of a deficit of -3.7 MMT in 2024/25.
Final Tuesday, sugar costs climbed to a 2-3/4 month high, extending the sharp rally seen since mid-January. The rally within the Brazilian actual (^USDBRL) seen from mid-December by mid-February to a 3-3/4 month high towards the greenback had discouraged export promoting from Brazil’s sugar producers and fueled huge fund short-covering in sugar futures.
Sugar costs have help from final Friday’s news that said India’s sugar manufacturing fell -14% yr/yr to 21.98 MMT within the advertising year-to-date from October 1 by February 28, in accordance with the India Sugar and Bio-Power Producers Affiliation.
In a bearish issue, the Indian authorities mentioned on January 20 that it will enable its sugar mills to export 1 MMT of sugar this season, easing the restrictions positioned on sugar exports in 2023. India has restricted sugar exports since October 2023 to take care of sufficient home provides. India allowed mills to export solely 6.1 MMT of sugar during the 2022/23 season to September 30 after permitting exports of a report 11.1 MMT within the earlier season. Nevertheless, the India Sugar Mills Affiliation (ISMA) tasks that India’s 2024/25 sugar manufacturing will fall -15% y/y to a 5-year low of 27.27 MMT.
The outlook for larger sugar manufacturing in Thailand is bearish for sugar costs. On October 29, Thailand’s Workplace of the Cane and Sugar Board projected that Thailand’s 2024/25 sugar manufacturing would soar by +18% y/y to 10.35 MMT. Thailand produced 8.77 MMT of sugar within the 2023/24 season that led to April. Thailand is the world’s third-largest sugar producer and the second-largest sugar exporter.
Drought and extreme heat final 12 months induced fires in Brazil that broken sugar crops in Brazil’s high sugar-producing state of Sao Paulo. Inexperienced Pool Commodity Specialists famous that as a lot as 5 MMT of sugar cane could have been misplaced due to the fires. Conab, Brazil’s authorities crop forecasting company, cut its 2024/25 Brazil sugar manufacturing estimate from November 21 to 44 MMT from a earlier forecast of 46 MMT, citing decrease sugarcane yields as a result of drought and extreme heat. Unica reported Wednesday that cumulative 2024/25 Middle-South sugar output by mid-February fell -5.6% y/y to 39.812 MMT.
The USDA, in its bi-annual report launched November 21, projected that world 2024/25 sugar manufacturing would climb +1.5% y/y to a report 186.619 MMT and that world 2024/25 human sugar consumption would increase +1.2% y/y to a report 179.63 MMT. The USDA additionally forecasted that 2024/25 world sugar ending shares would decline -6.1% y/y to 45.427 MMT.
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