USDA paints bullish picture of sugar market despite some upward revisions

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Despite the decline in earlier projections for world sugar exports and the increase in the volume of ending stocks, the United States Department of Agriculture’s (USDA) half-yearly outlook for the world sugar market is optimistic for the season in course (October 2021-September 2022).

In its “Sugar: World Market and Trade” outlook released last week, the USDA forecast world sugar exports at 63.11 million tonnes (mt) against 65.95 mt of its May estimate. But it will still be higher than the 62.68 mt from last year.

USDA projections along with another one from Tropical Research Services (TRS), which forecast another year of supply shortfall in the 2022-2023 season, are expected to keep sugar prices even higher, if not high. .

A deficit in 2022-23?

Thomson Reuters reported that TRS estimated the deficit at 4.04 tonnes.

The USDA said it lowered export estimates as Brazil and Thailand are expected to ship 3.1 tonnes and 445,000 tonnes less than initial projections.

On New York’s Intercontinental Exchange, raw sugar futures for delivery next March ended at 19.99 US cents per pound (33,030 per tonne) over the weekend. Cash delivery of sugar was also cited at the same rate. White sugar in London was priced at $ 512.60 (38,100 yen) per tonne for delivery in March.

Factors considered bullish for the sugar market are as follows: Current estimates of world production are lower than May estimates (181.08 t vs. 185.53 t), although they are higher than 180.12 t from last year ; an upward revision of consumption (174.54 t against 174.44 t) and upward import projections (54.22 t against 53.63 t).

Last season’s consumption was set at 171.10 mt, while imports at 55.16 mt.

Although ending stocks have been revised up to 45.65 t from previous estimates of 43.97 t, they are still lower than last season’s 48.75 t, according to the USDA.

India estimates

The USDA has set Indian sugar production at 34.7 mt from its May projections, up from 33.76 mt last season. “Indian production is estimated to be up 3% over a larger area,” he said.

Domestic consumption was set at a record 28.5 mt, again unchanged from initial projections but 0.5 mt higher than last season.

However, USDA raised India’s export estimate to 7 t from previous 6 t. But that would be 0.2 t less than the 7.2 t exported last season.

“Exports are expected to be high even without subsidies which have encouraged exports,” the agency said. Indian sugar factories and exporters have so far signed agreements to export 2.1 million tonnes.

Ending stocks are estimated to be 14.37 mt below previous projections of 16.57 mt, but higher than last season’s 14.17 mt. “Inventories are expected to increase slightly to levels that represent about seven months of consumption,” the USDA said.

Market concern

While India may be the darling of the global sugar market, Brazil will be its concern. Production in Brazil is expected to decrease from 6.1 mt to 36 mt against 42.05 mt. It is also lower than the initial projections of 39.9 mt.

“It is estimated that Brazil’s production will drop in part due to dry conditions and frosts. Due to the importance of Brazil as a producer and exporter, this reduction is expected to have a major influence on world sugar supply and prices, ”the USDA said.

Since sugar prices are firm and more attractive than ethanol prices, at least 46% of Brazilian sugarcane could be turned into sugar and the rest into ethanol. Its exports are expected to fall sharply by 26 Mt against

As overall sugar prices remain firm and relatively more attractive than ethanol prices, about 46 percent of the sugarcane crop is expected to be processed for sugar and 54 percent for ethanol, as in the previous campaign. Consumption is expected to be down slightly as stocks are unchanged. Exports are expected to fall sharply due to the drop in available supplies to 26 t against 32.15 t last season. In May, the USDA had set exports at 29.17 mt.

Other factors

Thailand’s sugar production is expected to rebound this season to 10 mt from 7.58 mt last season. However, it will be lower than the initial projections of 10.6 mt. With carry-over stocks of more than three tonnes, the Southeast Asian nation is expected to export 10 tonnes from four last season.

The USDA forecast higher sugar production in Pakistan and Australia, with the two countries exporting more than last season. For India, Australia and Thailand, shipments to Indonesia, India’s biggest buyer the previous season, are something to manage, although they are doing well in South Asia and South Asia. the West, especially in the Gulf region.


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