Sugar Closes At A 14-1/2 Month High On The Outlook For A Global Sugar Deficit

January 13, 2020
Barchart |

Mar NY world sugar #11 (SBH20) on Monday closed up +0.09 (+0.64%) and Mar London white sugar #5 (SWH20) closed up +6.40 (+1.70%).

Sugar prices on Monday rallied for a third session and posted a 14-1/2 month high on the outlook for global sugar deficit. Citigroup last Friday raised its global 2019/20 sugar deficit estimate to -7.6 MMT from a previous estimate of -7.0 MMT as sugar crop risks persist in India and Thailand.

Last Friday's WASDE report was also supportive for sugar prices after the USDA in its WASDE report cut its U.S. 2019/20 sugar production estimate by -1.5% to 8.158 MMT from a Dec estimate of 8.280 MMT.

Sugar prices also saw support from last Thursday's forecast from Paragon Global Markets that the 2019/20 global sugar deficit will reach -10 MMT, well above ISO's estimate of -6.1 MMT, due to lower sugar production in Mexico, U.S., and Thailand.

A bearish factor for sugar prices is weakness in the Brazilian real. The real on Monday fell -0.94% to a 1-month low against the dollar. A weaker real encourages export selling from Brazil's sugar producers.

A negative factor for sugar is a faster pace of sugar-crushing in India after India's Sugar Mills Association reported Jan 2 that India Oct-Dec sugar production was down -30% y/y to 7.8 MMT, which was an improvement from last month's data that showed Oct-Nov sugar production fell -54% y/y to 1.89 MMT.

Recent data from Conab was supportive for sugar prices as it suggested tighter future sugar supplies. Conab on Dec 19 cut its Brazil 2019/20 sugar production estimate by -5.3% to 30.1 MMT from an Aug estimate of 31.8 MMT. Also, Unica on Dec 20 reported Brazil Center-South sugar production in the first half of December plunged -92.4% y/y to 33,000 MT versus 432,000 MT in the same period last year.