Weak spot within the Brazilian Actual Hammers Sugar | U.S. Finance Information
Might NY world sugar #11 (SBK25) immediately is down -0.66 (-3.37%), and Might London ICE white sugar #5 (SWK25) is down -13.80 (-2.49%).
Sugar costs immediately fell sharply to 1-1/2 week lows after the Brazilian actual (^USDBRL) dropped to a 3-week low. The weaker actual encourages export promoting by Brazil’s sugar producers, prompting long liquidation in sugar futures.
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Sugar costs had been already on the defensive from Wednesday when sugar trader Czarnikow projected Brazil’s 2025/26 sugar manufacturing would climb to a document 43.6 MMT, saying producing sugar is more profitable than ethanol manufacturing.
In the meantime, the Worldwide Sugar Group (ISO) immediately 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. The ISO immediately 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 yr from its estimate of a deficit of -3.7 MMT in 2024/25.
On Tuesday, sugar costs edged to a new 2-1/2 month high, extending the sharp rally seen since mid-January. The rally within the Brazilian actual seen from mid-December via mid-February to a 3-1/2 month high towards the greenback has discouraged export promoting from Brazil’s sugar producers and fueled large fund short-covering in sugar futures.
Sugar costs noticed help from final Monday’s news that India’s sugar manufacturing fell -12% yr/yr to 19.7 MMT within the advertising year-to-date from October 1 via February 15, in keeping with the India Sugar and Bio-Vitality Producers Affiliation.
On February 13, Alvean, the world’s largest sugar trader, stated that below-average precipitation in Brazil means sugarcane is underdeveloped in some areas, and if showers stay weak, the sugar harvest that begins in April might be delayed, and sugar manufacturing would endure.
In a bearish issue, the Indian authorities stated on January 20 that it might 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 document 11.1 MMT within the earlier season. Nonetheless, the India Sugar Mills Affiliation (ISMA) initiatives 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 resulted in April. Thailand is the world’s third-largest sugar producer and the second-largest sugar exporter.
Drought and extreme heat final yr brought about 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 might 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 attributable to drought and extreme heat. Unica reported Wednesday that cumulative 2024/25 Middle-South sugar output via 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 document 186.619 MMT and that world 2024/25 human sugar consumption would increase +1.2% y/y to a document 179.63 MMT. The USDA additionally forecasted that 2024/25 world sugar ending shares would decline -6.1% y/y to 45.427 MMT.
On the date of publication,
Wealthy Asplund
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The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.
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