*Brazilian exports of raw sugar increased 111.3% in September
*A record 2.613 million ton of sugar from Brazil was delivered against the October contract
Sugar prices was consolidating just below a 7-1/2-month peak set 14.55 cents per pound (454 gram) on Monday, with the prospect of rains in Brazil over the next couple of weeks helping to stall the recent run-up, temporarily at least. March ICE raw sugar traded at 13.95 cents on Thursday. December white sugar fell by $3.40 to $383.70 a ton.
A record amount of 2.613 million ton of sugar from Brazil was delivered against the New York October contract, which was interpreted by the market as a continued bullish signal because this sugar will need to be cleared from the warehouses, said sugar analyst with S&P Global Platts.
Sugar production and ethanol exports increased sharply from Brazil in September as mills enter the final weeks of the current season, but the extremely dry weather started to hit cane agricultural yields, industry group Unica said. Average yield was 71.97 ton of cane per hectare, 1.4% less than seen a year earlier.
Brazil's center-south sugar output reached 2.86 million ton in the second half of September, 59% more than in the same period a year earlier, as mills sharply favor the sweetener in their production strategies at the expense of ethanol. Plants crushed 14% more cane in the period, or 40.22 million ton. Brazilian exports of raw sugar increased 111.3% in September year on year, from $420.36 million to $888.38 million, thanks to increased sales to Asia, due to a decline in sugar production in India and Thailand.
According to Wilmar Sugar the commodity price is projected to fall as export countries, such as India, battle pandemic-induced lockdowns. There also remains uncertainty about India's export policy. India has yet to announce the extent to which it will subsidize sugar exports this season, with talk the decision could be delayed until early next month. Rains are forecast in Brazil over the next couple of weeks, easing some concerns over prospects for the 2020/21 crop.
According to a preliminary report of the Indian Sugar Mills Association (ISMA), the domestic sugar production was estimated at 30.5 MT in 2020-21, which would be 12 per cent higher than 27.2 million ton in 2019-20. UP is estimated to have sugar output of 12.3 million ton. UP is the country’s top sugar and sugarcane producer and had logged 12.65 million ton in sugar output in the last 2019-20 crushing season, which was more than 45% of India’s sugar production of 27.2 million ton.
As Maharashtra sugar mills start crushing season on Thursday, they have a target to fulfil not to produce excess sugar but produce 104 crore litter of ethanol.
(Disclaimer: This analysis is only for educational purpose and is not and must not be construed as investment advice. It is analysis based purely on economic theory and empirical evidence. Readers are requested to kindly consider their own view first, before taking any position.) Date: 15-10-2020