Market Briefing: Sugar – 03 June 2021

 Global sugar production in 2020/21 estimated at 186.9 million tonnes
 Brazil’s sugar production likely to drop 5.7% to 38.9 million tonnes in 2021/22
 China’s sugar imports in April 2021 reached 180,000 tonnes

Production

Global sugar production in 2020/21 is estimated at 186.9 million tonnes, up from 179.7 million in 2019/20. This means that IHS Markit’s marginal surplus estimate for the 2021/22 season has gotten even smaller, at less than 0.1 million tonnes compared with 0.3 million previously. Meanwhile, the deficit in the current 2020/21 season has been cut to 3.4 million tonnes from 4.3 million in IHS’s previous projection.

India produced 445,000 tonnes of sugar in the first half of May, down from 824,000 in the second half of April and also below 723,000 tonnes in the same period a year ago, Indian Sugar Mills Association (ISMA) data showed. This brought total sugar production, since the start of the 2020/21 season, to 30.3 million tonnes, up sharply from 26.5 million a year ago.

Brazil’s sugar production is likely to drop 5.7% to 38.9 million tonnes in the new 2021/22 season, Conab said. Output from the Centre/South is seen dropping 6.4% to 35.7 million tonnes, while production in the North/Northeast region is projected to rise 2.8% to 3.1 million tonnes.

Demand

Apparent global sugar consumption in 2021/22 is practically unchanged from IHS’s previous forecast at 183.4 million tonnes (-0.1 million).

China’s sugar imports in April 2021 reached 180,000 tonnes, little changed from 200,000 in March but up significantly from 124,000 tonnes in the same month last year. This brought total sugar imports in the first 7 months of 2020/21 to 3.9 million tonnes, up sharply from 1.5 million imported in the same period last year and the highest total ever imported during the first 7 months of the season.

EU sugar imports in March reached 64,000 tonnes, down from 120,000 in the previous month and compared with 133,000 tonnes in March last year. This brought total imports in the first six months of 2020/21 to 593,000 tonnes, down from 1.05 million tonnes in the same period a year ago.

Trade

India’s sugar exports may touch 6.5 million tonnes in 2020/21 according to the National Federation of Cooperative Sugar Factories. The government has cut the subsidy on sugar exports from INR6,000 to INR4,000 per tonne, applicable from 20 May. However, this loss of USD27 per tonne should not have a major impact on 2020/21 shipments, with 5.7 million out of the mandatory export quota of 6 million tonnes already contracted and some mills even selling sugar without the support of government subsidies.

EU members exported 65,000 tonnes of sugar in March 2021, down from 70,000 in February and in line with 60,000 tonnes in the same month last year, according to preliminary Eurostat data. This brought total exports in the first six months of 2020/21 to 492,000 tonnes, down from 603,000 tonnes in the same period last year.

Price

Sugar started off May on a two-month high of 17.89 cents per pound, after which, the raw July New York contract has been moving sideways, at around 17 cents for the past two weeks. Sugar then hit a one-month low of 16.54 cents this week (May 24) before showing signs of recovery as the week progressed, bouncing back to 17.12 cents per pound by Thursday (May 27). Overall, raw sugar futures in New York have generally been weaker as stronger-than-expected crushing results in Brazil’s Centre/South were seen as bearish. The market was also dragged down by fears about rising inflation that may prompt the US Federal Reserve to raise interest rates.

(IHSmarkit)